Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

DEATH OF A MEMBER

Madam Speaker: I regret to have to report to the House the death of Sir Nicholas Hardwick Fairbairn, QC, Member for Perth and Kinross. I am sure that hon. Members in all parts of the House will join me in mourning the loss of a colleague and in extending our sympathy to the hon. and learned Member's family and friends.

Oral Answers to Questions — SOCIAL SECURITY

Benefit Payments

Mr. MacShane: To ask the Secretary of State for Social Security what measures he will take to ensure regular weekly giro payments of benefits during the winter in Yorkshire.

The Parliamentary Under-Secretary of State for Social Security (Mr. Roger Evans): The Benefits Agency aims to ensure that all customers receive their benefit entitlement on time. If, for whatever reasons, delays are experienced, procedures are in place to ensure that claimants receive their benefit entitlement.

Mr. MacShane: I tabled the question on behalf of my constituent, Philip John Place of Rotherham, an energetic, out-of-work young man who is taking part in a jobseeker's club—

Madam Speaker: Order. I am sorry to interrupt the hon. Gentleman, but it is much better to deal with constituency matters in written representations to the relevant Minister. If the hon. Gentleman has a question, perhaps he will ask it immediately so that the Minister may answer.

Mr. MacShane: Will the Minister give my constituents an assurance that when there is bad weather giro payments will be made on the day, and that if there is a delay for any reason a crisis loan will be available at once to save claimants trouble, fear and anxiety? There is such a thing as cold weather in the north of England.

Mr. Evans: I cannot comment on Mr. Place, about whom I have no details, but I am aware that there was exceptionally bad weather in the hon. Gentleman's constituency on 27 January. I am advised that, as a result, the Royal Mail had difficulty making deliveries, which is a matter for regret and we apologise. The limited information available to me is that Rotherham office may have made one crisis loan on 27 January. Perhaps that emphasises more than anything the need for the proposals of my right hon. Friend the Secretary of State to introduce modern benefit payment methods.

Pensions

Mr. Whittingdale: To ask the Secretary of State for Social Security what steps he is taking to increase choice in pensions.

Mr. David Evans: To ask the Secretary of State for Social Security what measures he is planning to increase choice in pensions.

The Minister for Social Security and Disabled People (Mr. William Hague): Government policies aim to provide a range of pensions provision from which


individuals can choose with confidence. We propose to strengthen occupational pensions law, introduce age-related rebates for contracted-out personal and occupational money purchase schemes and give personal pension holders more flexibility in the use of their savings on retirement.

Mr. Whittingdale: Does my hon. Friend agree that public confidence in choosing an occupational pension will be considerably increased by the news that the Maxwell scheme trustees have accepted a settlement in principle? Does he agree that much of the credit for that lies with Sir John Cuckney, and will he convey to Sir John the congratulations of the House?

Mr. Hague: Yes, my hon. Friend is right to draw attention to the good news of the agreement in principle for Maxwell pensioners, which is welcome. Details remain to be finalised, but Sir John and others involved have done a tremendous job. I hope that they will now be able to bring their work to a successful conclusion.

Mr. David Evans: What plans does my hon. Friend have for pensioners and people on fixed incomes if the lot opposite ever come to power? Is he aware that under the last Labour Government, pensioners and people on fixed incomes had their incomes savaged by 27 per cent. inflation, and that the lot opposite did not even pay a Christmas bonus two years out of the last four when they were in power?

Mr. Hague: My hon. Friend is absolutely right. Pensioners on fixed incomes suffered greatly under the previous Labour Government when electricity prices rose by 2 per cent. every six weeks. Under this Government, the proportion of pensioners in the lower income groups of the population has fallen dramatically and that is testimony to the success of our policies.

Mr. Corbyn: Will the Minister confirm that when the previous Labour Government left office, the state pension was about 24 per cent. of average earnings? What is it now? Will he tell us by how much each year he is subsidising the national insurance fund to promote private personal pension schemes at the expense of the state earnings-related pension scheme?

Mr. Hague: That is the sort of hostility to the private provision of pensions that could be deeply damaging to the future of this country. People who have taken out personal pensions are paying, from their own incomes, more than £2.5 billion a year. They are putting that money aside for pension provision in the future under the arrangements that the hon. Gentleman spends his time attacking. It is vital that there is additional provision on top of entitlement to the state pension, with the state pension being indexed in line with prices.

Mr. Enright: Does the Minister agree that many miners who, legally but criminally, were persuaded to change their pensions from the miners' pension scheme to private pension schemes have been done out of huge sums, which they cannot now get back under any of the new mechanisms put in place by the Government? Is not it about time that the Government did something urgently about this because it is at least as scandalous as the Maxwell case?

Mr. Hague: Where there has been mis-selling of personal pensions, the Government are anxious to see that

there is a remedy. The Government very much welcome the action that the Securities and Investments Board has now set in train to provide a remedy in precisely the circumstances that the hon. Gentleman describes.

Fraud Prevention

Mr. Ian Bruce: To ask the Secretary of State for Social Security if he will make a statement on the latest figures for social security fraud prevention.

The Secretary of State for Social Security (Mr. Peter Lilley): In 1993–94, a record £654 million of social security fraud was stopped by the Benefits Agency. In November, I announced an investment of £300 million over the next three years in measures designed to shift dramatically the emphasis of fraud work from detection and investigation towards prevention and deterrence. These measures will include more home visiting, improved information technology and automated payment of benefits at post offices. They are expected to save an additional £2.5 billion over the same period.

Mr. Bruce: I thank my right hon. Friend for that answer. Can he confirm that fraud prevention has increased by 17 per cent. this year? Can he give the House an assurance that officers in the Department of Social Security will make a special effort to check on people who have fraudulently claimed that they are asylum seekers and who have claimed many times? Clearly, although people in this country are only too happy to help genuine asylum seekers and their own citizens who have fallen on hard times, they will not stand for people flooding in to defraud our system.

Mr. Lilley: I can confirm, as my hon. Friend asks, the substantial rise in success in stopping fraud and thereby saving money for the taxpayer. We have made abuse of asylum applications much more difficult by introducing arrangements with the Home Office and by ensuring that the benefit is obtainable only from a single post office. Those measures have sharply reduced multiple applications and fraudulent abuse.

Mr. Frank Field: How do the Government answer the charge that they are soft on fraud and soft on causes? Is the Secretary of State aware that it is not just a matter of claimant fraud, with which all of us disagree, but a matter of the Department being open to fraud from gang warfare? Is he aware that there is massive landlord fraud in housing benefit and that the Department is now under attack from some of its own officers who open up bogus claims? Once a claim is opened up in the Department, how often is it audited?

Mr. Lilley: I assure the hon. Gentleman that the Government are not soft on fraud. I welcome the consistent support that he has given us on measures to crack down on fraud. Housing benefit is, of course, handled on behalf of the Government by local authorities. We have given them an increased incentive, both carrot and stick, to ensure that they eliminate wherever possible abuse of the housing benefit bill by landlords and tenants. It is absolutely right that they should do so and I urge every local authority to respond positively to the incentives that we have put in place.

Mr. Butcher: Will my right hon. Friend persist in the examination of housing benefit fraud? He will know that


some time ago I advised his Department of strong evidence showing that housing benefit was being claimed from more than 6,000 empty properties in Birmingham—the so-called giro drop scandal. My fear is that his officials may see the fraud as an affront to their professional competence rather than as something to be vigorously pursued. May I urge him to redouble his efforts with local authorities to investigate that matter?

Mr. Lilley: I will again follow up my hon. Friend's point. I assure him that there is no question of officials taking such fraud as an affront to their personal efficacy, since they are not, as I explained to the hon. Member for Birkenhead (Mr. Field), directly responsible for it. They have ensured that incentives are given to local authorities to pursue housing benefit fraud. It is a scandal when local authorities do not pursue it, because they are letting down the taxpayer and the council tax payer.

Child Support Agency

Mr. Ronnie Campbell: To ask the Secretary of State for Social Security what would be the cost to the Child Support Agency of implementing an income disregard for parents with care to the value of (a) £5, (b) £8 and (c) £10.

The Parliamentary Under-Secretary of State for Social Security (Mr. Alistair Burt): The estimated long-run costs of a £5, £8 or £10 maintenance disregard for parents with care in receipt of income support are approximately £110 million, £165 million and £205 million.

Mr. Ronnie Campbell: I agree with the Minister that, obviously, parents without care should pay for their children, but one of the problems that has arisen in the past year or so is that parents who remarry and have another family are penalised. The father is penalised in the sense that he has to pay for the children from his first family and his second family. [HON. MEMBERS: "Quite right."] No, Conservative Members are wrong. I repeat that the father is being penalised twice. He is being penalised for the children from his first marriage and again for children from his second family, if he has a second family.

Mr. Burt: I am not quite sure how the disregard may affect that situation. Among Conservative Members and, by general agreement, around the country, the idea that a man should remain responsible for his first family, no matter what his subsequent circumstances are, is very important. The point of the disregard is to give some recognition to the parent with care in the maintenance being received. We believe that that point is much better dealt with by the Government's proposed maintenance credit, which will give an incentive to return to work and will certainly ensure that a father in those circumstances fully realises the impact of the money that he is paying in maintenance.

Mrs. Roe: Does my hon. Friend agree that the maintenance disregard proposed by the Labour party would create unfairness and make it less worth while for the lone mother to return to work? Does he also agree that if the Labour party supports a disregard, it should say how it would pay for it?

Mr. Burt: My hon. Friend is quite right. The figures that I gave showed just how expensive a maintenance

disregard would be. We do not believe that it would achieve the object wished for by the Opposition. It would certainly create a higher barrier for those parents with care who wanted to return to work. As we know from all our surveys that most lone parents want to go back to work, we believe that a maintenance disregard with an incentive to return to work would be rather better than providing an incentive for not returning to work at all.

Mr. Dewar: On the costs of disregard, the Minister will remember that, throughout 1994, I was abused by him and the Secretary of State for profligacy on the ground that a £10 disregard would cost £340 million. Does he remember the way in which that figure dropped by May 1994 to £290 million? It is now £205 million. Will he please explain those discrepancies and apologise for some of the abuse that I received?

Mr. Burt: I cannot imagine either myself or my right hon. Friend abusing the hon. Gentleman on that point; it is not in our nature to do so. The changes in costs result from two matters in particular: first, we have been able to conduct greater sampling and, secondly, I am pleased to report that fewer lone parents are claiming income support, which most hon. Members should find quite encouraging.

Disabled People

Mr. Spring: To ask the Secretary of State for Social Security what steps he is taking to reduce discrimination against disabled people.

Mr. Congdon: To ask the Secretary of State for Social Security what recent representations he has received on the measures the Government are taking to help disabled people.

Mr. Hague: The Government's plans for ending discrimination against disabled people were set out in the White Paper on 12 January. They involve new initiatives in education and transport, in addition to the proposals in the Disability Discrimination Bill for new rights in employment and access to goods and services. These plans have been widely welcomed.

Mr. Spring: Does my hon. Friend agree that, apart from moral considerations, there are powerful commercial reasons to encourage businesses to provide access for disabled people? Does my hon. Friend agree that legislative proposals for businesses should be sensible and well judged and not based on wishful and woolly thinking?

Mr. Hague: My hon. Friend is absolutely right. Proposals must be clear, flexible and fair—as they are in the Government's Disability Discrimination Bill—and they must lead to genuine practical improvements, such as the recently agreed improvements to access at Bury St. Edmunds post office in my hon. Friend's constituency, in which he and many other people were involved and scored quite a success.

Mr. Congdon: I congratulate my hon. Friend on having the determination to get a Bill to eliminate discrimination on to the statute book. In proceeding with that Bill, will he give serious consideration to whether it might need strengthening to ensure that health and safety


considerations do not cut across the legitimate aim of ensuring that disabled people have access to, for example, places of entertainment such as cinemas?

Mr. Hague: I thank my hon. Friend for his support. He was right to draw attention to that issue. We are determined to ensure that the requirements to provide physical and other forms of access actually mean something and work in practice. As the Bill progresses through the House and the other place, those matters will have to be discussed.

Mr. Barnes: Two Bills are before the House on discrimination against disabled people—the Government Bill, which was supported by 27 votes on a three-line Whip, and my private Member's Bill, which, on a free vote, was carried by 175 votes. My Bill has the support of hon. Members from 10 political parties in the House, including the two Conservative parties, unlike the Government's Bill, which is supported mainly on a three-line Whip by Conservatives. In those circumstances, should not the House have an opportunity to determine between the two Bills or to discover whether there is, alternatively, a move towards the principles contained in the Civil Rights (Disabled Persons) Bill?

Mr. Hague: Let us put the hon. Gentleman right. His Bill was supported in the House by 175 hon. Members, the Government's Bill was supported by 307 hon. Members. If it comes to a choice between them, I do not fancy his chances much. The Government's Bill is clear, flexible, fair and in the interests of disabled people. The hon. Gentleman's Bill is confusing, unfair, inflexible and not in the interests of disabled people.

Mr. Corbett: Does not every single organisation of and for disabled people much prefer the Civil Rights (Disabled Persons) Bill of my hon. Friend the Member for Derbyshire, North-East (Mr. Barnes) to the Government's puny measure? Will the Minister therefore accept the need for a disability rights commission to ensure that people with disabilities enjoy the same rights as the rest of us?

Mr. Hague: Disabled people throughout the country want workable legislation that brings about a change in the law and, at the same time, a change in attitudes. That is what the Government's Bill will achieve and that is one reason why we wish to tackle the issue of enforcement by having not a commission but a locally available advice and support network to which disabled people can turn. That will be the sound, practical way to deal with those problems.

Social Security Reforms

Lady Olga Maitland: To ask the Secretary of State for Social Security what savings will result from the social security reforms announced so far.

Mr. Lilley: Our reforms will reduce projected expenditure by £4 billion a year, in today's prices, by the end of the century. Once the pensions reforms have worked through, in the next century, the total savings will be £14 billion a year as a result of the changes that we have made.

Lady Olga Maitland: I thank my right hon. Friend for his reply. Will he confirm that, with the reduction of unemployment and with the attack on waste and fraud, by

the turn of the century the burden on the taxpayer will be down by £8 billion or 3p in the pound on the basic rate of income tax?

Mr. Lilley: My hon. Friend is absolutely right. The forecasts of social security spending by the end of the century are now £8 billion less than when we first made them in response to the Social Security Select Committee and before the long-term review of social security spending began. Four billion pounds is due to the direct savings of the changes in the structure of the social security system, which we have announced, and the other £4 billion is due to the improved economic and social outlook in this country as a result of the Government's policies.

Ms Lynne: Does the Secretary of State agree that savings to the Government mean cuts in benefit to the most disadvantaged? Does he accept that Government policies such as the jobseeker's allowance will do more to allow tax cuts before the next election, rather than do anything to get the unemployed back into work?

Mr. Lilley: The hon. Lady, as is typical of her party and indeed of all Opposition parties, thinks that money comes from the Government. It comes from taxpayers. At present, it costs every working person, on average, £15 every working day to finance the social security system in this country. The Liberal Democrats' aim is to increase that amount; ours is to prevent it from increasing.

Mr. Alan Howarth: I welcome among my right hon. Friend's objectives his desire to eliminate fraud, but will he confirm that the Benefits Agency has found that only 5 per cent. of benefit fraud involves deception about identity? Will he at all times be vigilant to safeguard civil liberties in the development and application of smartcard technology, under the auspices of his Department? Will he set his face absolutely against the introduction of a national identity card scheme, whether voluntary or compulsory?

Mr. Lilley: My hon. Friend is quite correct. Of the identified frauds and abuse in my Department only 5 per cent. involve abuse through misrepresentation of identity. The bulk of fraud and abuse is the misrepresentation of circumstances of people whose identity is not in doubt. We believe that we can reduce that incidence of fraud and abuse very substantially by the introduction of a payments card, which I agree with my hon. Friend is a very different kettle of fish from an identity card. People who wish to receive benefit through the post office will need such a card. People who choose to receive benefit through banks will have whatever form of identification the banks require. We are also introducing other measures that will substantially reduce misrepresentation of identity fraud, so the extra gains which might come from a compulsory identity card would probably be very small.

Mr. Bradley: Does the Secretary of State accept that savings should not in any way undermine public confidence and trust in the social security system? Will he therefore investigate claims made on BBC South-West that the Benefits Agency in Bristol has contracted out the opening of mail to a private firm? Such mail might include sensitive and confidential information on benefit claims, and staff might not be accountable to the Benefits Agency or, more important, to Parliament.

Mr. Lilley: I assure the hon. Gentleman that anybody who has any involvement with facts and information


about claimants will be bound by a duty of confidentiality, whether they are employed by the civil service or by a contractor for the civil service. Sub-post offices, all of which involve private entrepreneurs and not employees of the state, have an obligation to claimants equal to that of any civil servant.

Personal Pensions

Mr. Simon Coombs: To ask the Secretary of State for Social Security what measures he is taking to make personal pensions more attractive to older people.

The Parliamentary Under-Secretary of State for Social Security (Mr. James Arbuthnot): In the Pensions Bill, we are introducing age-related rebates for personal pensions to ensure that appropriate personal pensions are attractive over a broader age range.

Mr. Coombs: Will my hon. Friend confirm that the Pensions Bill, which is now in another place, is firmly on course to enact the manifesto commitment of the Conservative party to make personal pensions more attractive across the full range of ages? Does he agree that, with the proposal in law, personal pensions will be attractive to people of all ages and that it will be in their interests to sustain their pensions throughout their lives?

Mr. Arbuthnot: The age-related rebates which we are phasing in will mean that most people will be attracted to maintaining their personal pensions throughout their working lives. They will also be able to choose when to buy an annuity up to the age of 75.

Mr. Chisholm: Does the Minister accept that one of the most unattractive features of pensions for many older women is the diminution of their pension rights following divorce? Given that seven studies have been conducted into the matter already, why are the Government insisting on a further study? Why will they not accept the amendment that has been tabled in another place to ensure the equal division of pension rights following divorce?

Mr. Arbuthnot: The hon. Gentleman will know that the Pensions Law Review Committee said that this was an exceptionally complicated matter. The Government recognise that and, as a result, we have accepted the recommendation of the committee that further work should be done. The research will be available towards the end of the year. A debate is taking place in another place this afternoon on the matter, and no doubt the hon. Gentleman will go along to listen to it.

Dr. Spink: Will my hon. Friend confirm that the average total net income of pensioners grew by 50 per cent. between 1979 and 1992? Does that not show how much the Government care for pensioners? What targets does my hon. Friend have for that figure in the coming years?

Mr. Arbuthnot: My hon. Friend is right, but I do not have a limit on targets. Pensioners will do very much better in the next few decades. We have more funded pension provision than any other country in the European Union. The proposals of the Opposition would threaten that very good position.

Poverty

Mr. Mackinlay: To ask the Secretary of State for Social Security if he will make it his policy to conduct a

major survey of the incidence and extent of poverty currently prevailing in the United Kingdom; and if he will make a statement.

Mr. Burt: Information on the patterns of household disposable income are already provided in the "Households Below Average Income" publication of the Government Statistical Service, and more will be available from the first full year of the family resource survey. It is expected to be of considerable benefit to the Department in aiding the formulation and evaluation of social security policy.

Mr. Mackinlay: What is the Government's definitive response to the findings of the Joseph Rowntree Foundation and the Panorama programme "Dead Poor", which showed that the gap between those with health and wealth and those experiencing poverty is getting wider? Do the Government accept those findings? If not, why does the Minister think that they are flawed? If the Government do not accept the findings, will the Minister set up an inquiry using further survey methods to ascertain the full extent of poverty?

Mr. Burt: The hon. Gentleman knows well that poverty statistics are notoriously difficult to analyse. He will also know that whatever statistics he cares to choose will show that the access of the lowest 10 per cent., as regards income, to what used to be called luxury goods—cars, telephones, videos and so on—has risen inexorably over time.
Widening income inequality has tended to come from changes in the labour market, particularly the increase in two-earner couples, and changes in the rates given for different occupations over a period. The solution to the one is physically to restrain two-earner couples—I suspect that that is not the intent of the hon. Gentleman, nor of his part—and to the other is to deal with different wages by a prices and incomes policy. If that is the policy of the hon. Gentleman, he should tell people.

Mr. Jenkin: Does my hon. Friend agree that other measures of standards of living show that the poorest 10 per cent. have vastly improved access to things which improve the quality of their lives, such as telephones, freezers and washing machines? Does he also agree that a party which advocates a national minimum wage cannot be serious about reducing poverty, because a national minimum wage would enormously increase unemployment and poverty?

Mr. Burt: My hon. Friend makes a point about the minimum wage that was made by the right hon. Member for Kingston upon Hull, East (Mr. Prescott) before the last general election. It had its impact on jobs. My hon. Friend also points out that this is a genuinely complex matter. The best way in which poverty can be attacked is by bringing about improvements through creating jobs. That is why the Conservative Government have introduced policies that have helped unemployment to fall by some 500,000 in the past two years. If those policies were followed by some socialist economies on the continent, those economies might prove a little more successful than they currently are.

Pension Entitlement (Divorcees)

Mr. Austin Mitchell: To ask the Secretary of State for Social Security what proposals he has for allowing divorcees who paid the reduced rate of contribution to share their husband's pension entitlement.

Mr. Arbuthnot: Provision already exists which allows a divorced woman who does not remarry before pension age to obtain a pension based on her former husband's national insurance contribution record instead of her own in respect of the period up to their divorce.

Mr. Mitchell: Is not that provision inadequate, given that the pension entitlement is one of the biggest assets that married couples have? Should we not have a simple rule that the entitlement from all pensions up to the date of divorce is divided between the couple? Why do we need the inquiry that the Minister mentioned earlier when the principle is clear and we are the only country in the European Union that does not give the wife some entitlement to her pension? Would there not be a considerable saving in benefit if that were done?

Mr. Arbuthnot: The hon. Gentleman is, I think, confusing the state retirement pension with rights to occupational or personal pensions, so I shall simply rely on what I have already said, which is that a great deal of further work is needed, as the Pensions Law Review Committee has said. We are doing that work.

Benefits

Mr. Sims: To ask the Secretary of State for Social Security if benefits will continue to be delivered through post offices.

Mr. Lilley: We are committed to continuing to give pensioners and others the right to receive their benefits at the post office. We are moving speedily to an automated system for paying benefit at post offices, including the introduction of benefit payment cards to replace order books and girocheques.

Mr. Sims: Does my right hon. Friend accept that, while there are obvious advantages in making payments through banks and building societies, some people—particularly the elderly—prefer to go to post offices to collect their pensions? Will he confirm that the automated system to which he referred has been welcomed by sub-postmasters and will bring them additional business?

Mr. Lilley: My hon. Friend is right. Many pensioners and others prefer to receive their benefits at post offices. Many do not have bank accounts so they could not easily have their benefits paid elsewhere. My hon. Friend is also right that the measures that we have proposed have been warmly welcomed by the National Federation of Sub-Postmasters. By eliminating fraud, our proposals will be good for the taxpayer. By making payments more convenient, they will be good for the pensioners. By increasing the range of facilities of sub-post offices, they will strengthen the national network of sub-post offices.

Fraud

Dr. Twinn: To ask the Secretary of State for Social Security how he is planning to reduce fraud involving order books and giros.

Mr. Arbuthnot: My right hon. Friend the Secretary of State has announced his intention to replace order books and girocheques with a more secure system based on benefit payment cards. This should eliminate fraud related to payments, and will also provide substantial administrative savings.

Dr. Twinn: Does my hon. Friend agree that fraud is widely resented by the vast majority of benefit recipients and by taxpayers? Does he welcome the £100 million of savings that were made in the last financial year in giro and order book frauds? Does he agree that his proposals will be welcomed in the fight against fraud in the future?

Mr. Arbuthnot: My hon. Friend is right. There has also been a consistent increase in the overall savings from fraud that the Department has made. Last year, the savings were £654 million, which was an increase of 17 per cent. on the year before. That is good news for everyone.

Mr. Skinner: Is the Minister aware that one of the biggest frauds in social security is the fact that about £500 million a year is lost by employers who take their national insurance and tax from employees and do not hand it over to the responsible authorities? Hardly any action is taken against those employers. Why do not the Government do something about it? The Secretary of State can keep his trap shut.

Mr. Arbuthnot: The hon. Gentleman has raised that matter before. He was wrong then and he is wrong now.

Habitual Residence Test

Ms Church: To ask the Secretary of State for Social Security when he expects the Income Related Benefit Schemes (Miscellaneous Amendments) (No. 3) Regulations 1994 (No. 1807) on the habitual residence test to come into force.

Mr. Roger Evans: The regulations came into force on 1 August 1994.

Ms Church: How can the Minister defend a system that means that thousands of British nationals find, on their return to this country, that they do not have rights to the benefits that they expected? They are people who cannot be described as crooks, drug addicts or undesirables.

Mr. Evans: I am a little puzzled by the supplementary question because the hon. Lady's main question asked when the regulations would come into force. As I pointed out, they came into force on 1 August 1994; 14,789 British citizens have passed the test and 2,086 have failed. The Government take the view that benefit tourism is strongly resented by the British taxpayer and that those who have not paid taxes in this country recently must expect to wait a while.

Oral Answers to Questions — PUBLIC ACCOUNTS COMMISSION

Accountants (National Audit Office)

Mr. John Marshall: To ask the Chairman of the Public Accounts Commission what is the number of accountants employed by the National Audit Office.

Sir Peter Hordern (representing the Public Account Commission): I understand that the National Audit Office employs about 370 qualified accountants and 62 qualified accounting technicians. One hundred and twenty-three staff are training for those qualifications. In addition, the National Audit Office contracts out about 10 per cent. of accounts audit work to the private sector. As a result, all accounts are audited by trained staff. The NAO also employs a wide range of professional staff in other disciplines, both to undertake value-for-money work and in administration.

Mr. Marshall: I am sure that my right hon. Friend would agree that the level of fraud within the European Union is one of the biggest scandals in public expenditure. Has the Comptroller and Auditor General had any discussions with the European Court of Auditors with a view to dealing with that scandal?

Sir Peter Hordern: The Comptroller and Auditor General is deeply interested in that matter. I can confirm that he has had discussions with members of the European Court of Auditors with a view to finding out what proposals might be put forward to remedy some of the frauds that have taken place and to present those proposals at the next intergovernmental conference. However, the difficulty remains and it is not so much the establishment of that form of corruption, but the lack of will on the part of member countries to deal with it.

Mr. Flynn: Would it not be a good idea to get the accountants and auditors to look at frivolous candidates in elections so that candidates who do not have a hope of proper victory do not get involved in the election process? Will the right hon. Gentleman note that the Conservatives are to be congratulated on getting more votes in Islwyn last week than the Yogic Flyers and the official raving loony party, and are now the official loony party? Can he reply?

Sir Peter Hordern: rose—

Madam Speaker: The right hon. Gentleman seems anxious to respond. Is that right?

Sir Peter Hordern: I was only going to say that if the Comptroller and Auditor General had to deal with that matter he might equally be asked to investigate what happened in the rugby match between England and Wales.

Oral Answers to Questions — SOCIAL SECURITY

Maxwell Pensioners

Mr. Mudie: To ask the Secretary of State for Social Security what is the latest position concerning the payment of pensions to members of the various Maxwell pension schemes; and what are the prospects for further recoveries.

Mr. Arbuthnot: I warmly welcome the Maxwell scheme trustees' acceptance in principle of settlement

offers in respect of various claims. I understand that the Maxwell Pensioners Trust has sufficient funds to continue to support pension payments while discussion of terms and conditions takes place. If a final settlement is agreed, the Maxwell pensioners should enjoy a secure future.

Mr. Mudie: The Minister is aware that even the sum agreed is many millions short of what went missing. Will he reassure the House that efforts to get the remaining money will continue? Does he share my concern about the millions of pounds that should be going to the Maxwell pensioners' fund which are being spent on legal fees, and will he do anything about it?

Mr. Arbuthnot: I am sorry that the hon. Gentleman did not take the opportunity to welcome what is very good news for Maxwell pensioners. If the settlement takes place, as we very much hope, it will save large amounts of legal fees because it will avoid the need for litigation.

Sir David Madel: Is my hon. Friend aware that Maxwell pensioners with deferred pensions will welcome that settlement? Will he assure me that the Government will continue to monitor the position closely until a final and happy solution to the dreadful problem is reached and all Maxwell pensioners can breathe freely in the knowledge that all is well?

Mr. Arbuthnot: Yes; and I take this opportunity to congratulate and thank my hon. Friend for the considerable work that he has done on behalf of his constituents, many of whom are Maxwell pensioners. He has approached me on several occasions to make precisely those points.

Retirement

Mr. Waterson: To ask the Secretary of State for Social Security what measures he will take to give people more choice in how to plan for their retirement.

Mr. Arbuthnot: I refer to the answer given earlier today by my hon. Friend the Minister of State for Social Security and Disabled People to my hon. Friend the Member for Colchester, South and Maldon (Mr. Whittingdale).

Mr. Waterson: I thank my hon. Friend for that answer. Can he confirm that some 65 per cent. of recently retired pensioners also have occupational pensions? Does that not underline the great success of this country compared with practically all our European partners in developing a successful and deep-seated private pension industry, which will be further strengthened by my hon. Friend's Pensions Bill?

Mr. Arbuthnot: I can. Not only do an increasing number of people retiring now have occupational pensions, but they have them in increasing amounts. Our pensioners can look forward to a good future.

Oral Answers to Questions — HOUSE OF COMMONS

Day Nursery Facilities

Mr. Barnes: To ask the right hon. Member for Berwick-upon-Tweed, representing the House of


Commons Commission, what is the latest position concerning the setting up of day nursery facilities in the Palace of Westminster.

Mr. Janner: To ask the right hon. Member for Berwick-upon-Tweed, representing the House of Commons Commission, what further progress has been made towards the establishment of a day nursery in the House.

Mr. A. J. Beith (representing the House of Commons Commission): The Commission will consider its policy on child care facilities at its next meeting and will take into account the views expressed in the debate in the House on 12 January.

Mr. Barnes: Of all organisations, should not the House of Commons be a top employer in terms of that and many other matters? So that it can recruit and retain experienced staff, is it not important to have creche facilities or, alternatively, child care allowances, for which the unions in this place are pushing strongly? If those are seen as a subsidy, is it not a much more justified subsidy than those which hon. Members receive for car parking facilities, booze and refreshments?

Mr. Beith: The Commission recognises the force of the argument that, as a good employer, it is in the House's interest to ensure that such facilities are made available to staff. The debate was one way in which the Commission sought to bring the matter before hon. Members and to establish whether a creche or voucher scheme, or a combination of the two, was preferred. We shall consider the House's reactions to that at our next meeting.

Mr. Janner: Does the right hon. Gentleman recognise that, in far too many ways, we are not good employers? Hon. Members on both sides of the House are scandalised at how we treat our staff, not least because 4,000 people are employed in the Palace of Westminster with no creche, day nursery, vouchers or special facilities. When the Commission meets next week, will the right hon. Gentleman tell it that an uprising will take place on both sides of the House if it does not move?

Mr. Beith: I would not have described the debate that took place as an uprising, although it was informative. I remind the hon. and learned Gentleman that the Commission, which has not been slow to press this matter on the House, is responsible for the employment of the staff of the House, and not of hon. Members' staff. We are anxious to ensure that any progress made will also benefit hon. Members' staff, but the hon. Gentleman must direct his fire at the appropriate place.

Mr. Jenkin: Does the right hon. Gentleman agree that it will sit ill upon us if we spend taxpayers' money wantonly on improving conditions for our staff when we do not think that those conditions are appropriate for people employed in other walks of life?

Mr. Beith: I understand that the Government think it appropriate that, in some situations, work place nurseries should be provided and they allow tax relief for that purpose. In many parts of the public service, voucher

schemes have been established for child care. The Commission seeks to ensure that its employment policies are in line with the best practice in the public service.

Mr. Harry Greenway: Will the right hon. Gentleman confirm that, in the House of Lords, women employees have an allowance for creche or child minding facilities outside the House, but that is not the case for House of Commons staff? If so, why?

Mr. Beith: Yes, although I should explain that the allowance is not limited to female members of the staff of the House of Lords, but to those who exercise parental responsibilities, whether female or male. The debates in January explored how that had developed, and one of the issues that we considered was whether it would be appropriate to do it in the House of Commons. The Commission will be considering precisely that.

Disabled People (Access)

Ms Lynne: To ask the right hon. Member for Berwick-upon-Tweed, representing the House of Commons Commission, when the Commission will authorise expenditure to make the Grand Committee Room fully and independently accessible by disabled people; and when the work will be carried out.

Mr. Skinner: To ask the right hon. Member for Berwick-upon-Tweed, representing the House of Commons Commission, what further plans there are to improve facilities for disabled people visiting the House.

Mr. Beith: I refer the hon. Members to the reply given by the hon. Member for Ogmore (Mr. Powell) to the hon. Member for Tooting (Mr. Cox), on 8 February, Official Report, columns 343–46, which describes in detail the conclusions of the review by the Accommodation and Works Committee into access for disabled people. The Committee's recommendation for access to the Grand Committee Room is the replacement of the chairlift with a platform lift, which would allow disabled people to remain in their wheelchairs. In addition, it is proposed that the design work for the conversion of the Westminster Hall cafeteria into a visitors' centre should consider how a lift can be incorporated into that area.

Ms Lynne: I am grateful to my right hon. Friend. Can he tell me what time scale we are talking about, because, as he is no doubt aware, two weeks ago, disabled people lobbied Parliament and were discriminated against yet again in this House? They could not even hear their Members of Parliament speaking, because of a ban on microphones being used in Westminster Hall. In the meantime, before the Grand Committee Room gets a lift, would it be possible for Members of Parliament to be able to use microphones in Westminster Hall when there is a disabled people's lobby of Parliament?

Mr. Beith: Subject to the feasibility study, which is already in progress, it is hoped that work to convert the lift into a platform lift will be carried out this year. I do not anticipate that finance will be an obstacle to that.
The use of microphones in Westminster Hall is not a matter for the Commission, and Madam Speaker explained to the House on 9 February the reasons why the use of the microphones is restricted to the staff in the Department of the Serjeant at Arms. As I understand it, the Hall was fulfilling the function of the Central Lobby


rather than that of a meeting room. I have no doubt that the appropriate authorities will have noted my hon. Friend's point and will give it further consideration if that need arises before the work has been done.

Mr. Skinner: Why should disabled people, when they come to lobby their Members of Parliament, be shunted into draughty, cold Westminster Hall? Why is it not possible for disabled people to come into Central Lobby in the same numbers as ordinary, able-bodied people? Can the right hon. Gentleman tell us how much it would cost to ensure that 200 disabled people can get into Central Lobby as easily as able-bodied people rather than having to wait for about two hours to get through all the various securities, lack of lifts, and so on? Why do not he and his Committee tell the Government exactly how much it would cost to provide equality, and tell this tin-pot Government to provide the necessary money and the wherewithal in the Government's supposed Disability Discrimination Bill, which is before the House?

Mr. Beith: The Accommodation and Works Committee decides the priorities and made the proposal for the changes that I have described. So far as I am aware, the Commission has placed no obstacles in the way of any improvements that the Committee has recommended.

Photographic Unit

Mr. Austin Mitchell: To ask the right hon. Member for Berwick-upon-Tweed, representing the House of Commons Commission, whether the Commission will make it its policy to ensure that a House photographic unit is set up.

Mr. Beith: The Commission's normal practice is to consider expenditure on new services for Members only when a recommendation has been received from the relevant domestic Committee. I understand that the hon. Gentleman recently put such a proposal to the Administration Committee, which rejected it.

Mr. Mitchell: The Administration Committee was looking not at that but at allowing photography by members of the public. Does the right hon. Gentleman accept that photography is an essential part of both popular education and communication? It is a means of showing people what this place does and its activities, and encouraging interest in that. Would it not be better if we set up a proper photographic unit to do those jobs—as most grown-up Parliaments do—rather than pretend that photography has not yet been invented? Or do he and the Committee believe that photography steals a part of people's immortal souls, that Members are so irredeemably ugly that they should not be photographed or that we cannot compete with a medium that never lies?

Mr. Beith: I have had my photograph taken by the hon. Gentleman several times—usually when I was not expecting it. I hope that it has done no harm to my soul. The Commission is not responsible for the rules that determine where photographs may be taken, and the hon. Gentleman should direct his inquiries appropriately on that point, but no proposal has been put to us for a central unit. I am not sure that it would meet the wider educational purposes that he described for there merely to he a central unit. I think that he has a wider use of photography in mind.

Health Awareness

Mr. Tony Banks: To ask the right hon. Member for Berwick-upon-Tweed, representing the House of Commons Commission, what financial provisions are being made to improve health awareness throughout the House.

Mr. Beith: No direct financial provisions are being made, but since 1991 an expanded occupational health service has been funded as part of the Serjeant's Department. In addition, a number of training courses in health and safety are provided for staff of the House, and the Gymnasium is available for the improvement of personal fitness.

Mr. Banks: May I remind the right hon. Gentleman that, although the House may not be a dangerous place in which to work, it is certainly an unhealthy place in which to work? Many hon. Members are killing themselves through their own lifestyles. I am not making a special plea for Members of Parliament, but surely it is wrong for anyone in this country to die of ignorance—and ignorance, or lack of health awareness, is clearly a major factor in mortality rates. Is it not about time that we had a proper programme that set an example? Is it not time that we in the House had healthy minds and bodies?

Mr. Beith: I am sure that the hon. Gentleman is right, and I hope that many of us do have healthy minds and bodies; but the Commission's responsibility has mainly been to its staff. A number of initiatives have been taken for staff health and safety, including measures to deal with back injuries and to promote awareness of the dangers of smoking.

Business Of the House

Mr. Ian Bruce: To ask the Lord President of the Council how often he has (a) been able to advise the business of the House two weeks in advance and (b) been able to keep to it.

The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton): Each week since the Christmas recess, I have been able to give the House more information about the second week than under previous practice, particularly in relation to business on the second Thursday. I am glad to say that it has not yet proved necessary to change any business of which an advance indication has been given, although it has sometimes been necessary to add to it.

Mr. Bruce: I thank my right hon. Friend for his answer, and for the valiant efforts that he is making to give the House more notice of, in particular, occasions on which we may he able to accept speaking engagements outside the House.
Will my right hon. Friend give special attention to the way in which Bills are announced? Last Thursday, he was able to announce that we would be dealing with one Bill and eight orders, but that effectively gave us only two working days' notice. If our constituents want to lobby us in order to tell us that any of the many worthy measures with which we are to deal offends them in some way, they


have only two or three working days in which to do so. May we be given some idea of future business at least a fortnight in advance?

Mr. Newton: I am grateful to my hon. Friend for acknowledging the efforts that I have undoubtedly made to give more notice than before. However, his reference to a day on which a number of orders will be dealt with leads me to observe that days like that may involve quite a lot of juggling until a late stage: that is one of the difficulties to which I have constantly adverted.
As for the Bill that my hon. Friend mentioned, I shall be frank about the difficulty. Two weeks ago, there was some doubt about whether it would have completed its Committee stage at the relevant time. Although I should be more than willing to be told that hon. Members would not mind me making a pre-judgment in such circumstances, tradition suggests that the announcement of a Bill's Report stage before it had emerged from Standing Committee would receive an adverse reaction.
The hon. Member for Dewsbury (Mrs. Taylor) looks sceptical. If she can assure me that the Opposition would not object, in certain circumstances, to the announcement of a debate on the remaining stages of a Bill before its Committee stage had been completed, no one would be more pleased than I.

Point of Order

Mrs. Anne Campbell: On a point of order, Madam Speaker. Have you had any indication of a Government statement on the allegations in the Independent on Sunday about suppression of a report by the Equal Opportunities Commission into Government policies and their damaging effect on women's jobs of compulsory competitive tendering?

Madam Speaker: I have not had any indication from the Government that they are seeking to make a statement on any issue today. No doubt those on the Treasury Bench have heard what the hon. Lady had to say.

Opposition Day

[7TH ALLOTTED DAY]

Health Care (London and South East)

Madam Speaker: I have selected the amendment in the name of the Prime Minister. I have not restricted speeches for either of today's debates. I leave it to the good sense of Back Benchers and Front Benchers to exercise some voluntary restraint so that everyone who wishes to be called is likely to be called.

Mrs. Margaret Beckett: I beg to move,
That this House expresses its concern at the evidence of continuing crisis of health care in London and the South East; believes that the scale and nature of the crisis stems directly from the Government's failure either to assess the health care needs of the area properly or to plan a programme by which those needs can be met; believes that the process of the internal market and Government-driven so-called 'reforms' are making matters worse; and calls for a moratorium on further closures until a fresh and thorough review has been carried out of the mounting evidence of serious misdirection of health care across the whole of the area.
Yet again, it is the Opposition who provide the opportunity for a debate on health care in London and the south-east, both because it is important in itself and because of the light that it casts on the implications for Britain as a whole of Government health policy.
It is important to flush out the Secretary of State for Health to give us her views on these matters. She is fond of talking about stewardship and responsibility, but less fond of exercising them. It is also valuable to have the debate at this time, because we are at a turning point, a crucial point of change.
On Saturday, a large conference discussed the crisis in London health care as the effects of Government policy begin to be felt. In two days' time, the consultation period on proposals to close Bart's hospital will come to an end, and we shall see whether the health authority meant what it said when it suggested that public reaction to those proposals would influence its decisions.
We are on the brink of other, greater change. Decisions will be made against the background of still greater cuts in funding for the authority which controls Bart's, and cuts for other authorities which rank high on the Department of the Environment's list of authorities dealing with high levels of poverty and deprivation. Of course, the debate is also held against the background of the final, full implementation of the Government's dogma-driven policies.
In April, the special health authorities—hospitals such as Moorfields, the Bethlem/Royal Maudesly and the Royal Marsden, which have been cushioned until now from the full effects of Government policy—will face the impact of the Government's so-called reforms, as the full internal market finally comes to London. Londoners await that process with the same anticipation as they once awaited the arrival of Boadicea.
Five years ago, London was the undisputed health care capital of. Europe. The French newspaper Liberation carried out a survey of medical research and teaching in 1989, which put London's medical schools at the top of


the European league, above even Oxford and Cambridge. It ranked them as the best in the continent, not just in Britain, and said:
the density of its network is such that this premier position is in no way a surprise; the different colleges each on their own cover the full range of specialties.
The report went on to refer, rather optimistically, to
the one constant which does not change: the supremacy of British medicine.
London has always been the key to the top ranking of British medical science. It trains 30 per cent. of new doctors and a quarter of new dentists. Half of all the highest grades awarded in clinical medicine are gained by people who went to university of London medical schools. That is not accidental. London's large catchment population and the concentration of medical resources have enabled the maximum interaction between science and clinical medicine. That has provided the strong base needed to sustain the caseload required for training and development.
In fact, like that other great national institution, football, until recently the hospital service in London was one of our greatest assets—an institution in which London's citizens could take great pride. It is now threatened with disintegration and collapse. Several of the most famous teaching hospitals on which the medical schools depend face closure, including Bart's and Guy's, while others are to be amalgamated. The post-Tomlinson rationalisation could lead to a flight of research revenue and income. Dozens of professors and top consultants face redundancy, and many are leaving London, with the consequent exodus of medical talent.
As with football, so with health care—London is now in danger of being relegated to the international second division. Like hooligans at a Chelsea-Millwall match, the Government set out wilfully to vandalise a service that was once orderly, well managed and widely supported. The question that we want to ask is the same question as that behind the inquiries into the recent England-Ireland game—is the Government's sabotage of London's health service the action of mindless vandals, or are they motivated by extreme right-wing ideology?
Lord Sutch of the Monster Raving Loony party does not seem to be in any doubt. On Friday, he said how disappointed he was that the Conservatives had just pipped his party into fifth place in the Islwyn by-election. He said:
We thought we would beat the Tories, but by mistake people voted for the wrong loony party.
I must differ from Lord Sutch— the Government are not just loonies, and they are not just hooligans, although the Secretary of State gets called before judges to account for her vandalism of the health service. She and her colleagues are guilty of willful destruction, but it is not mindless hooliganism.
Just like many of the troublemakers at our football matches, the Government are driven by right-wing ideology, which they coldly and deliberately calculate will wreak havoc in our public health service, just as it will create opportunities for those who can profit if what is lost from the public sector is replaced in the private sector— and unlike many of football's troublemakers, the Government are carrying out their strategy with stealth, and in furtive secrecy.
Unfortunately, the strategy's effect on London is especially acute. While London is a centre of medical excellence, it is also a city of harrowing deprivation and savage contrasts between rich and poor. Four out of five of the areas of greatest deprivation in Britain are, according to Department of the Environment indices, in London. Unemployment, a major cause of ill-health, in London is double the national average. Perinatal mortality in London is 74 per cent. above the national average. A third—

Mr. Tim Yeo: Will the right hon. Lady give way?

Mrs. Beckett: In a moment—I am sure that the hon. Gentleman will want to hear the figures.
One third of all those who died from hypothermia in 1992—the latest year for which we have figures—lived in London. Some 75 per cent. of all HIV and AIDS cases are in London; 42 per cent. of United Kingdom reported cases of tuberculosis in 1992 were in London—in itself increased by 13 per cent. since 1988; and 60 per cent. of all Britain's homeless and people living in temporary accommodation are in London.
Being a great metropolitan city also means that London attracts huge numbers of visitors and commuters, all of whom increase the strain on its health service.

Mr. Yeo: The right hon. Lady mentioned perinatal mortality. Does she agree that it is one of the most objective indices of good health that can be applied to any nation and any region of any nation? Does she further agree that, since 1979, there has been a substantial fall in perinatal mortality across the whole of the United Kingdom, and that nowhere is that fall more substantial than in London, where the figure is down from 12.7 per 1,000 to 7.1—a drop of 44 per cent?

Mrs. Beckett: Improvements have been made in perinatal mortality rates. I am afraid that I do not have the figures or the report with me—mind you, Madam Speaker, nor does the hon. Gentleman. He borrowed them from his hon. Friend the Member for Hertsmere (Mr. Clappison), who presumably had the briefing.

Mr. James Clappison: rose—

Mrs. Beckett: I shall give way in a minute—one intervention at a time, thank you.
If one considers, in particular, inner-city wards where deprivation is highest, that puts those figures very much into the shade. The hon. Member for Suffolk, South (Mr. Yeo) knows that my point is about the deprivation level across London. The overall average figures have improved, as they have elsewhere. That is what we expect. They improve year on year, century on century; there is nothing new about that.
The hon. Gentleman said that the figures had improved, but he knows that they have not done so where greatest deprivation exists. Although I do not have the figures with me, my recollection is that, under this Government, the position has worsened in some areas of greatest deprivation.

Mr. Clappison: rose—

Mrs. Beckett: I shall give way to the hon. Gentleman. Has he now found some other figures?

Mr. Clappison: Will the right hon. Lady take it from me that the standardised mortality ratio shows that


London has an above-average performance in mortality rates? Contrary to what she has said about deprivation areas, the most recent statistics show that the biggest reduction in infant mortality has been among the lowest social classes 4 and 5. The best improvement has been made in those social classes.

Mrs. Beckett: I give the hon. Gentleman the undertaking that I will read carefully what he has said, but it contradicts much of the other published evidence. I hope that neither of the two hon. Gentlemen who have intervened are contesting my basic point about the deprivation level and about the serious problems that occur in London and are concentrated in London, disproportionately even to other inner-city areas in the United Kingdom.
The hon. Member for Suffolk, South is sitting there smirking. Does he disagree with that basic case?

Mr. Yeo: When the right hon. Lady responded to my previous intervention, she tried to imply that I did not know what I was talking about. She may not know this, but other hon. Members will know that, before I came here, my full-time job involved running the Spastics Society, whose major research and publicity campaigns dealt precisely with this point. That is why I have the figures in my head and why she does not.
Does she agree, as I asked her to agree before—she dodged the question—that the perinatal mortality rate is one of the most objective statistics on the measure of health in any country, and in the regions of those countries? Does she further agree that, under this Conservative Government. in the past 17 years, there has been a substantial fall in the rate throughout the UK, and particularly in London? I quoted the figures, which were kindly supplied by my hon. Friend the Member for Hertsmere (Mr. Clappison). They demonstrated that there has been an even improvement across the country.

Mrs. Beckett: I did not dispute what the hon. Gentleman said about perinatal mortality rates, because they are an important indicator. I am never in danger of forgetting that the hon. Gentleman was a director of the Spastics Society before he came to this place, because, as he will recall, I sat with him on a Committee where the Government made savage cuts in the benefits paid to people with disabilities, and I waited for him to protest on their behalf, which he failed to do.

Mr. D. N. Campbell-Savours: I am sorry to intervene on my right hon. Friend, but, before she concedes anything on that front, may I tell her that, some years ago, I challenged those statistics in the northern region? The statistical base was rubbish, so let us be careful before we concede anything on those statistics.

Mrs. Beckett: I am most grateful to my hon. Friend. I note that, despite all that the hon. Member for Suffolk, South has said, he does not appear to be disputing either that deprivation is concentrated in London, or some of the indicators of that deprivation.
There is, of course, much more to London's health service than its hospitals. The glory of the health service in Britain, what is unique, what possibly has made it—or did make it—the most cost-effective health service in the world, has been the emphasis on primary care, in particular in relation to general practice. Unfortunately, in London that has long been an area of weakness.
In the early 1980s, reports identified some 15 per cent. of general practitioner premises as being sub-standard, but, under this Government, that problem has got worse. By the time of the Tomlinson report in 1992, 46 per cent. of general practice premises were said to be below the expected standard, yet such a development must have been foreseen. As early as 1982, the Acheson report drew attention to deficiencies in primary care in London, and to the need for those deficiencies to be addressed. Nothing happened. Not one of the report's recommendations was implemented. Thirteen years on, matters are substantially worse.
I hope that the Secretary of State will neither try our patience nor further undermine her reputation by pretending that the Government's determination to strengthen general practice has led to the attack on London's hospitals. Throughout the Government's period in office, general practice in London has deteriorated, and there is little to suggest that the current Secretary of State will do better than her predecessors.
I cite the precedent of the London Ambulance Service. Two years ago, the right hon. Lady told the House that she would be taking a close personal interest in the service's work and improvement. It is one of the few policy areas for which she has taken any responsibility, and I do not think that even she would claim that an outstanding success.

Mr. Nigel Spearing: After the LAS area collapse two years ago, I sent the Secretary of State a copy of my memorandum to the Page committee. Last week, I sent the right hon. Lady the 50-page memorandum published by the Select Committee on Health, to which I gave evidence 10 days ago. Does my right hon. Friend agree that the Secretary of State should reply to my letter asking her to point out any errors of fact in my conclusions or where she differs from them? Is not the Secretary of State responsible to the House, and should she not give an undertaking to reply when she speaks today?

Mrs. Beckett: I am sure that the Secretary of State heard my hon. Friend, and that she will reply to his point. I share my hon. Friend's view that it is part of Government responsibility to deal with such matters and to respond to queries from hon. Members. After all, the Government are accountable to this place.
The Government's continuing implication that improvements in general practice, if and when they come, will lead to reduced demand for hospital beds is indefensible, as is their justification for a further massive reduction in the provision of hospitals and beds throughout London and the south-east. Beds are already being closed at breakneck speed, before investment in general practice can provide an alternative.
The pace of closures is accelerating. Between 1982 and 1990, 7,000 acute beds closed in London, but since 1990, another 3,200 beds—one in six of the 1990 figure—have closed. Since 1982, 39 per cent. of acute beds have closed in London, compared with a national average reduction of 23 per cent.

Lady Olga Maitland: Will the right hon. Lady give way?

Mrs. Beckett: I will, but this may be the last time that I do so, because I am mindful of Madam Speaker's observations.

Lady Olga Maitland: In suggesting that those bed closures are a scandal, the right hon. Lady is totally misrepresenting developments in modern medicine. Does not she accept that they mean that patients can spend fewer days in hospital, creating less demand for beds?

Mrs. Beckett: Of course I accept that, but the hon. Lady will be aware of severe doubts about the pace at which beds are removed.

Lady Olga Maitland: indicated dissent.

Mrs. Beckett: It is no use the hon. Lady shaking her head. She must know the problems in London if she even looks at the Evening Standard—never mind reads it. The Government anticipated reduced demand, rather than waiting to see whether it occurred. The hon. Lady must be aware of all kinds of problems, such as patients being re-admitted after being discharged too early, and of questions about day case surgery and the anaesthetics used. It is not a simple equation of changes in medical technology enabling beds to be taken out of use. Most people in London accept that readily.
There is not a shred of evidence that improvements in general practice are forthcoming to allow a reduction in beds. There is growing belief that primary care improvement in London may reveal substantial unmet need for hospital treatment. The assumption that London has too many beds is increasingly open to question, because of long waiting lists and continuing reports of overwhelming pressure for beds. The latest report shows that psychiatric beds are at 140 per cent. occupancy, with patients sent to centres as far away as York to be treated in the private sector because there are no psychiatric, acute or secure beds available in London.
Not long ago, we were told that not one intensive care bed was available anywhere in London for an adult or a child. The London health consortium has described the pressure on the provision of beds in London. It says that if there are further bed cuts—or a bad winter which, fortunately, so far, we have not had in London—they could prompt a full-scale crisis in London's health service.
The case is open to question—never mind comparisons with capital cities elsewhere in Europe, although those cast doubt on the Government's case—because of comparisons with other cities in the United Kingdom which cast doubt even on the theoretical case for further cuts. Ministers used to argue that London and the south-east had a disproportionate share of hospitals and of beds, and used a disproportionately high amount of health service funds. Earlier studies by the King's Fund, like the Tomlinson report, seemed at first to confirm those assertions although they caused bewilderment among many who found them hard to square with the reality of London health care.
However, further work, most notably by Professor Jarman at St. Mary's hospital, which has been backed up by an even more recent study by the London health consortium, has demonstrated that if we compare like with like and city with city, it is not true that London is

over-provided either with beds or with funds. In fact, the most recent figures on bed usage have Leeds, Newcastle, Manchester, Liverpool and Birmingham all above London in their use of health service beds. London has only a little above the average figure for the whole of Britain. The evidence on which the Government have relied for their changes is simply not there—quite apart from the huge and fundamental flaw at the heart of both reports to which I referred. The flaw is that they relied on the assumption that Government policies would of themselves, by the application of the internal market, remove beds from London. It was not a question of whether the beds were needed, but a question of the impact of Government policy.
The figure I quoted for the comparison between London and other cities, which shows that there is not over-provision in London, squares with the day-to-day experience of Londoners. It squares with the 168,000 people on waiting lists for the main trusts and the 6,000 people waiting for treatment in the special health authorities. The figure squares with the 140 beds that were never opened at the new Chelsea and Westminster hospital where, in the seven months from April to November last year, there was an increase of 128 per cent. in numbers on the waiting list. It squares with the threat to the existence of University College hospital when the funds of Camden and Islington health authority were slashed. The figure squares with the revelation that in Redbridge, there is no elective surgery for those waiting less than 18 months and with the fact that Redbridge waiting lists have gone up by 46 per cent. It squares too with the fact that Whittington hospital is closed for non-emergency elective surgery, with little indication about where the people whom the hospital previously served are expected to go.

Mr. Jeremy Corbyn: Is my right hon. Friend aware that the restriction on non-elective surgery does not apply to the patients of fundholding GPs and private patients? They can get treatment at Whittington hospital. Does my right hon. Friend agree that that is the disgraceful two-tier health service which so many people in my constituency are expected to put up with?

Mrs. Beckett: No one could disagree with my hon. Friend's point. The position is very worrying for those who are unable to be in practices that are eligible for the Government's scheme.
The examples of deficiencies in health care that I have given all come from the time before the most recent proposal for still further changes in funding for London's health authorities. Inner and outer London together were expected to lose about £100 million in the coming year. Outer London has had some reprieve, gaining about £46 million more than expected, but £41 million of that gain has been slashed from inner London.
Health authorities in areas which rank among the most deprived in the country now stand to lose still larger sums. East London and the City, the authority in which St. Bartholomew's is situated, now stands to lose a further—almost—£14 million from its funding. Kensington, Chelsea and Westminster stands to lose almost £15 million, and Camden and Islington, which was already set to lose £27 million, will now lose more than £30 million—getting on for £31 million. Every one of those areas was already the subject of concern expressed in this


House, primarily by Conservative Members on behalf of their constituents, in the debate on London health care in October.
Those new figures also show that London will receive just under 15 per cent.—14.9 or 14.8 per cent.—of the funding, despite having to cater for 15 per cent. of the population. So London is receiving an under-provision in revenue, especially when we recall the under-recording of London's population left as a legacy of the poll tax.
That brings me to perhaps the most blatant example of the chaos over which the Secretary of State reigns, which directly results from the neglect, vandalism and incompetence of Ministers. When she launched the new patients charter, the Secretary of State was pleased to boast of a new trolley standard. [Laughter.] Under previous Governments, Labour or Tory, the notion that waiting hours on a trolley in a casualty department was a standard daily expectation was inconceivable.
In January, Bart's accident and emergency department closed. The week before its closure, patients were having to wait up to 36 hours to be admitted to the alternative facilities, and some 15 patients could not be found beds because of the pressure placed on those facilities. Guy's accident and emergency department is under threat. Many patients are expected to go to St. Thomas's. But, last week, even before the closure of Guy's accident and emergency unit, patients from St. Thomas's had to be sent back to Guy's, because. there were too many to be treated at St. Thomas's.
All London has read of the child with an arrow in his eye, who spent eight hours being shuttled between hospitals before he was allowed into Bart's for emergency treatment.

Mr. Peter Bottomley: Will the right hon. Lady give way?

Mrs. Beckett: Was the boy with an arrow in his eye one of the hon. Gentleman's constituents?

Mr. Bottomley: indicated assent.

Mrs. Beckett: Then I shall give way.

Mr. Bottomley: The newspaper report said that a child in my constituency had been taken by air ambulance to Moorfields hospital, and that the doctors at Moorfields had been told by the paramedics that the child could not be taken to Bart's. When I checked with the local evening newspaper news desk, it said that, in fact, the child had been taken to the Royal London hospital, and that the doctors at Moorfields had not asked the London Ambulance Service whether the child should be transferred for neurological or ophthalmic treatment at Bart's. If the right hon. Lady is to read newspaper cuttings, she should check them, in the way that the constituency Member of Parliament does.

Mrs. Beckett: I do not think that the hon. Gentleman is in any way casting doubt on the point I made, which is that, right across London, there is huge pressure on casualty departments, and right across London there is strain. It is not surprising that, in such circumstances, people do not always make the correct decision—the decision that they should have made at the outset.
It does not alter the fact, whoever was at fault, that that child waited all those hours for treatment. Nor does it alter the fact that, as we heard in the previous debate, we can

Produce a string of lists outlining incidents of people waiting hours on end in casualty departments right across London, of which the hon. Gentleman is perfectly aware.
In consequence, right across London and the south-east, there is fear and anger. There is anger at the loss of valuable facilities that people believe are needed, and there is real fear, especially among parents, as private surveys of opinion show, that, should their children be injured or fall seriously ill, the treatment they would need would simply not be there.
In our previous debate, the Secretary of State talked about her stewardship of our health service. Let us examine that stewardship for a moment, and look at her strategy for London and the south-east, especially for accident and emergency services.
Has there been an overall review of accident and emergency services as there has for other specialty services? No. How many hospitals in London provide such services? According to parliamentary questions, the Secretary of State does not know and, what is more, she does not think that it is any of her business.
How many accident and emergency departments are there in London and the south-east? The Secretary of State does not know, and she does not think that it is any of her business. How many accident and emergency departments are due to close in London and the south-east? The Secretary of State does not know that, either, and she does not concern herself with it. Stewardship? The Secretary of State does not know the meaning of the word.
The Government have abandoned the management, planning and co-ordination of change in London. They have abandoned their duty to those who live and work in and around the capital. The Government are always urging on us the virtues of private sector management, but no big business would act as the Secretary of State acts.
The manager of every branch of Woolworth arid McDonald's has a degree of freedom to manage the unit, but that freedom can be practised only within a well-defined and clear framework, and within guidelines laid down by the parent company. As I understand it, nothing is more precisely defined than a McDonald's hamburger.
There are varying degrees of autonomy for local business units in London's national health service, but with no strategic framework. Just imagine if the chairman of Kingfisher, the parent company of Woolworth, was asked how many Woolworth branches there were in London, and he had to reply that that information was not centrally held, which is the Secretary of State's stock reply.
Imagine that McDonald's was restructuring its business and downsizing its operation, and, when the shareholders asked how many branches were going to close, the chairman said, "This information is not held centrally."
A whole new vocabulary is developing. "Rationalisation" means—

Mr. Nigel Forman: Will the right hon. Lady give way?

Mrs. Beckett: No: I have almost finished.
"Rationalisation" means closure. "Information not centrally held" means "I haven't got a clue", and instead of decisions we have strategic directions. We have a


strategic direction for the Secretary of State: the exit is that way, and she can rationalise the door behind her as she goes.

Mr. Forman: Will the right hon. Lady give way now?

Mrs. Beckett: I have almost finished, and I am mindful of Madam Speaker's observations.
Imagine if ICI had just invested in a new state-of-the-art building, the most modern in the industry, which had cost £150 million and had taken eight years to build. However, before it was even occupied, the chairman decided that the facilities would never be used by that part of the business for which it was intended. Just imagine what the shareholders of the company would say to such a cavalier and irresponsible treatment of their funds.
However, that is exactly what will happen to Philip Harris house at Guy's hospital, which the Secretary of State has decided will never be used for the service that it was intended to provide. That is typical of the Government's cavalier attitude to the use of public and private funds.
In London and the south-east today, there is no strategic planning, no overall investment strategy and little consideration of whether a wider national or public interest should materially affect decisions locally made. There must be a moratorium on further bed closures, in case they have already gone too far.
In the breathing space that such a moratorium creates, there must be a fresh and thorough assessment of the needs of health care in London, of needs driven by medical technology, which was the case made by the hon. Member for Sutton and Cheam (Lady Olga Maitland), and of the needs of elderly and frail people, particularly where, as in London, there is such a lack of alternative places. There must be an assessment of those needs, and further consideration of how those needs are to be met.
By no definition, and by no standard, can the Secretary of State's attitude to health care in London and the south-east be called stewardship. The Government are not stewards, because that word implies duty, responsibility and care. The Government are just incumbents, and the sooner they cease to be so, the better for London, the better for the south-east, and the better for Britain.

The Secretary of State for Health (Mrs. Virginia Bottomley): I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
'recognises that, because of medical advance, shifts in the population and the changing needs of patients, reform of the health service in London is both necessary and long overdue; congratulates Her Majesty's Government for its resolve in addressing the modern needs of people in the capital and the South East, in sharp contrast to the vacillation and evasion of the Opposition; and believes that policies now being pursued have already delivered a better health service for the area, enhancing the excellence of research, teaching and treatment as well as improving local health services in the parts of greatest need.'.
I welcome this opportunity to describe the progress being made to modernise London's health service. We are improving the quality and responsiveness of hospital services. We are investing in primary care and we are enhancing the capital's status as an international centre of

clinical teaching and research. I shall be announcing more money for primary care. I shall tell the House of important new developments around some of the hospitals and medical colleges in London and important changes taking us nearer to the heart of our vision of four world-class hospital complexes clustered around multi-faculty universities and colleges.
I congratulate the right hon. Member for Derby, South (Mrs. Beckett) on being here to open the debate. The last time Labour Front-Bench Members chose to debate health in London, their health spokesman did not even turn up. Instead, their transport spokesman came along, mouthed a few sound bites in advance of impending local elections and sat down. He said nothing about Labour policy. That showed the real face of the Labour party: it is interested not in serious health issues but only in party politics and partisan advantage.
I give credit to the right hon. Member for Derby, South. She suffered widespread criticism of her Trappist approach to Labour health policy. With some justice, The Lancet recently asked:
What would a Labour government do with the NHS?
With some justice, it gave the answer:
It's no use asking the Party's spokeswoman on health; she refuses to say".
However, the right hon. Lady has now produced a plank of policy. Unfortunately, it is the wrong policy, but we cannot have everything. She wants a moratorium on bed closures in London. She wants, as her motion states,
a fresh and thorough review".
There have been about 20 fresh and thorough reviews in the past 80 years, and they have all said the same thing: we need movement and improvement, not a moratorium. London needs action and change, not yet another review.
Labour Members have cut themselves off from what has to be done. They have ignored even the advice of The Guardian, which stated:
A party preparing for Government should resist the easy option—opposing all hospital closures—and concentrate on filling out its own plans.
Rarely can a party have so wallowed in the irresponsibility of opposition. Labour Members' dithering in opposition shows why Labour would be such a disaster in government.
I should say at the outset that I cannot comment in detail on the proposals around St. Bart's, the Royal London, or Guy's-St. Thomas's. They are or have been the subject of statutory public consultation and as Secretary of State I am in a quasi-judicial position in relation to the proposals which are likely to come to Ministers for final decision.

Mr. Brian Sedgemore: The consultation period on whether Bart's is to close ends tomorrow. Yet in yesterday's edition of The Sunday Telegraph there was a quotation from a letter from the Secretary of State for Employment saying that the decision to close Bart's had not been taken lightly by the Prime Minister and by the Government. What is the point of consultation when decisions have been taken before 6 February and consultation is continuing until 21 February?

Mrs. Bottomley: I am grateful to the hon. Gentleman for giving me the opportunity to make it clear that the matter is subject to open consultation. I am sorry that


there should have been any misunderstanding at all. I am sure that the hon. Gentleman and his constituents, and my right hon. Friend the Member for City of London and Westminster, South (Mr. Brooke), will be extremely pleased to hear that.
The hon. Gentleman will be aware that on the previous matter there was a great effort to take the issue to judicial review. That challenge was totally and utterly rebutted. In all matters, Ministers have behaved with absolute propriety and will take forward the consultation in the proper way. I am delighted to make that absolutely clear.
These are serious matters affecting not only London and Londoners but people throughout the country. I should like to set out again the underlying issues facing those and all the great hospitals in London. They are the same issues which face the south-east and the rest of the country. The issues are linked: what we do in London affects what can be done outside London. The London health service is part of a national health service.
The service in London faces many difficult challenges. One of the reasons why we began the process with Tomlinson was precisely to address those problems head-on. To duck out now would blight the capital's health service for at least a generation. The Labour party's shoddy analysis of London's needs and problems will not do. The fundamental issues, none of which the right hon. Member for Derby, South addressed, result from changes in where people live, changes in how they choose to be cared for, and the need to adapt to the evolving potential of modern medicine.
Within a six-mile radius of this place there are about 22 major acute hospitals. That cannot be said of any other part of the country. That concentration of hospitals grew up mainly in the previous century to meet national rather than specifically London needs, let alone the day-to-day needs of local communities. The population has moved away. London's population has fallen dramatically by about 1.3 million in the past three decades. People who used to come to inner London hospitals from all over the south-east and beyond are now turning to their own hospitals for care.

Lady Olga Maitland: My right hon. Friend refers to the reluctance of patients to come to London. Is she aware that patients in my constituency in Sutton can now go to the St. Helier's national health trust hospital, which provides all the services they need?

Mrs. Bottomley: A generation ago, people travelled from the home counties to the London hospitals, but there has been a massive development of services throughout the home counties. Patients and GPs rightly say that they would rather have treatment close to home than travel to London. That is precisely what is causing great difficulties for the London hospitals, which have fixed overheads.

Mr. John Austin-Walker: Does that square with the Secretary of State's decision to transfer further into London the regional neurosciences units and the cardiothoracic units based at the Brook hospital in Greenwich, which serve the Kent area?

Mrs. Bottomley: I shall be emphasising at some length later in my speech the crucial importance of academic excellence and research. London has been a capital city for medical research and teaching, and there is duplication

and fragmentation of centres. If we wish to be a world capital for medicine in the next century, we must concentrate on centres of excellence.
We undertook an unprecedented review of the specialty services, in which about 200 clinicians were involved. The prime position given to the Institute of Psychiatry and the campus at Denmark Hill, and the contribution which could be made to international research and teaching by the integration of the neurosciences centre from the Brook hospital were decisive factors in our supporting the recommendation. It is precisely that commitment to excellence that has driven the framework within which the changes have been seen.

Mr. Hugh Dykes: I am sorry that I was late for my right hon. Friend's opening remarks. She rightly referred to the growing importance of a comprehensive range of services in outer London and in the home counties. Does she agree that it is vital to keep open— in all and in part— the services of Edgware general hospital in the future?

Mrs. Bottomley: My hon. Friend—like almost every constituency Member of Parliament—has a great affection for his local hospital, the way in which it has evolved over the years and the service that it provides for the local community. The dilemma that we face— which any responsible Government would face— is that report after report has argued that if we want clinical excellence we must look towards the consolidation of services. For example, at the Royal London we can have a 24-hour consultant-led accident and emergency department.
A couple of weeks ago, a major report from the clinical standards advisory group argued again about the quality that we should be looking for in an accident and emergency department. We can deliver that quality, commitment and back-up in terms of staff only if units come together. A balanced judgment must be taken on the pace at which we move towards those centres.
Another example is cancer services. The Chief Medical Officer's report on cancer services argues for a concentration of centres with a relevant critical mass, which always leads to difficult decisions for individual Members of Parliament.
I say openly to the House that if we want to have the quality of services advanced by the royal colleges and by virtually every expert report, we must see how we can address the issue of hon. Members' great affection for their local hospitals which cannot provide the critical mass, the sub-specialties and the costly equipment that we need for state of the art services.

Mr. Dykes: On a point of order, Madam Speaker. In view of the unsatisfactory nature of that reply, I beg leave to give notice that, with your permission, I shall seek to raise the matter on the Adjournment.

Madam Speaker: I have noted what the hon. Gentleman has said, but as the motion is not a substantive one he should not have interrupted at this stage. He must seek an Adjournment debate and take his chance.

Mrs. Bottomley: I used my hon. Friend's particular example to make a more general point which any responsible holder of my office has to take into account


when looking at the interface between a series of expert reports and the understandable and strong views of constituency Members of Parliament.

Several hon. Members: rose—

Mrs. Bottomley: I should make headway. The point is well made. The constituency points made by my hon. Friend are subject to consideration. Decisions have not been made. I was using the example to make a more general point.
Not only do we have hospitals around London. As my hon. Friend the Member for Sutton and Cheam (Lady Olga Maitland) said when she gave an example from her constituency, some patients who are treated in London would prefer to be treated closer to home. An example is the new cardiac unit being built in Plymouth to treat, among others, patients who currently come 250 miles to the Royal Hospitals trust. A new £5 million cardiothoracic centre is being established in Brighton. There are two major new oncology centres, in Maidstone and, as my own constituents know well—

Mr. D. N. Campbell-Savours: Ah.

Mrs. Bottomley: —in Guildford, where £12 million is being spent upgrading and relocating cancer services.
That is the modern health service taking root. History has left a proliferation of small specialist units within a few miles of each other in central London. Before the hon. Member for Workington (Mr. Campbell-Savours) gets too carried away, he will want to know that in my constituency I have faced precisely the changes that I have described in relation to my hon. Friend the Member for Harrow, East. My own hospitals are becoming community hospitals because we have a concentration of speciality services outside my constituency, in Guildford. I hope that the hon. Gentleman understands that.
Those small units, often within a few miles of each other, are run by skilled clinicians. In these days of modern medicine and high technology, it cannot make sense for the speciality reviews to find 10 radiotherapy units, 13 cardiac surgery departments and 11 renal dialysis centres all in such close proximity. The simple fact is that it is impossible to sustain the highest quality care in so many fragmented centres. The talent and expertise of the clinicians, and the money available to purchase equipment, is too thinly spread.
As I have made clear, the number of patients referred to London for specialist treatment will fall. As it does, it will become ever more difficult to maintain the quality of services in each centre. The royal college training accreditation is in jeopardy in neurosciences and other specialities at Bart's because the number of patients that it treats is now below the clinically recommended levels.
For example—this, again, is an issue for my hon. Friend the Member for Harrow, East (Mr. Dykes)—Professor Sir Norman Browse, the president of the Royal College of Surgeons, has said:
To maintain and improve professional standards, we have to amalgamate the remaining in-patient beds so that they achieve the critical mass necessary to provide the experience needed to train and educate junior doctors and maintain the consultants' expertise.

Time and again, expert o and independent speciality reviews have argued that for better patient care we must have specialist services concentrated in fewer, larger centres, so as to make better use of finite resources and dedicated staff.
Modern clinical equipment is expensive. A computerised tomography scanner can cost £500,000. A magnetic resonance imager can cost £1.5 million. By clustering hospitals, we can ensure the best use of these medical miracles, which were not even conceived when the NHS began in 1948, let alone when most of London's hospitals were constructed in the last century.
We can make better use of our doctors, with their highly specialised and scarce skills. We are committed to reducing junior doctors' hours. My hon. Friend the Minister is meeting them this week to discuss the issue further. Smaller units needing 24-hour cover require junior doctors to be on site all the time. With fewer larger centres, the load can be spread. We can achieve the ambition both of the Government and doctors to improve the quality of life for medical professionals.
There is another reason why we need fewer, better centres. Fragmenting services across so many sites makes it much more difficult to manage beds. We frequently hear about the pressure on beds for emergency admissions and I do not discount the problem. A recent comprehensive study in London, carried out by the inner London health authorities, dealt with that important issue and I commend it to the House. Copies are easily available in the Library and, I believe, in the Vote Office.
The report states:
Larger hospitals and those with larger pools of beds were found to be better able to manage variations in demand for admission. Those with a lower proportion of emergency admissions could operate at higher occupancy levels.
The report concludes:
Better clinical and management systems than in the past need to be in place if such problems are to be handled without detriment to quality of care or the planned admission of non-urgent patients.
In a significant passage, it states:
It was thought that extra acute beds would not solve those problems in a cost-effective way. They are better addressed by the management of admissions and discharges in collaboration with all the parties involved.
The Government have set out the strategic direction for the health service in London, which that important report endorses.

Mr. Peter Shore: On the important question of concentration of facilities in one spot, obviously there is an argument for larger and fewer units and we are familiar with it—it applies to many things other than the health service or hospital services—but there are disbenefits and additional costs from highly concentrated organisations.
The London hospital is to be concentrated on the Whitechapel site, with the closure of the London Chest hospital, part of Bart's and the Queen Elizabeth hospital. A huge and costly investment programme will be necessary on the Whitechapel site to provide facilities which one hopes will be similar and equal to those to be closed. Is there any guarantee that the money will be made available within the time scale involved?

Mrs. Bottomley: Obviously, those matters are all subject to the consultation, on which I cannot comment at the moment. If the right hon. Gentleman has read the


document, he will know that, out of something like a £95 million cost for the status quo, much of the capital cost will be used to refurbish the existing facilities. The document suggests that there will be revenue savings of £22 million a year as a result of concentration on one site.
The right hon. Gentleman will be aware that academics and researchers feel strongly about the great opportunity to bring together research teams; with a larger group, they can have sub-specialties and all the opportunities of mixing disciplines. Academics, with whom I spend an enormous amount of time, are concerned that if we allow the fragmentation of the small centres to continue it will be almost impossible to build up the substantial clinical and research teams with which they hope to pioneer innovations.

Mr. Forman: I am mindful of my right hon. Friend's argument about the benefits for academics of an inter-disciplinary approach in large clusters of hospitals, and it obviously makes sense. But is she aware of another argument, which tends to point the other way—the possibility of diseconomies of scale on the managerial side if the management of those vast enterprises are expected to manage something many times larger than the units that they were managing?

Mrs. Bottomley: I accept my hon. Friend's argument, but the hospitals that we are discussing are relatively modest in size compared, for example, with some of the most internationally famous hospitals in the United States.
I regard Boston as a competitor with London in terms of the prime position in medical research and teaching. It was interesting for me to meet the professor in charge of Massachusetts university hospital recently as he was amalgamating a 1,000-bed hospital and an 800-bed hospital. The changes that we are making in London are being made in Boston, Sydney, Paris and virtually every capital city in the world. Those changes matter so much partly because Londoners deserve a better health service. As the right hon. Member for Bethnal Green and Stepney (Mr. Shore) may know, my first job was in Bethnal Green, so I know only too well how inadequate and paltry the community and family doctor services were for people in that area. However, I am also strongly committed to our international position and centres of excellence. It is no coincidence that our university hospitals of Oxford and Cambridge, in areas where there is no fragmentation or duplication, find things much easier than some London centres precisely because those are so numerous.
It would be wrong to delay matters, have a moratorium, and abandon the process of change because that would put everyone in limbo and a state of uncertainty. People in London want to know what the future holds and to build for the next century.

Sir John Gorst: Will my right hon. Friend help me by reconciling her logic and information with the illogical feelings of my constituents, who are unanimously against her proposals? Have I any alternative but to represent their views in the Lobby, contrary to how my right hon. Friend would wish?

Mrs. Bottomley: I repeat what I said to another hon. Friend: a balance must be struck between the move towards clinical excellence, the concentration of services, better services, the issue of junior doctors' hours, and the pace at which change can be achieved. Issues concerning

my hon. Friend's hospital are being carefully addressed. I totally accept that every hon. Member must balance local wishes, which are nearly always to avoid change—the populism that we have seen from the Opposition today—and a more principled approach which believes that if we want clinical excellence for the future we must face and take difficult decisions.

Sir John Gorst: Without my vote, then.

Mrs. Bottomley: I hope that my hon. Friend will discuss those matters further.

Mr. Corbyn: Will the Secretary of State give way?

Mrs. Bottomley: No. Many hon. Members wish to speak in the debate.
We need to invest in the acute sector and more must be done to improve infrastructure in London. We are backing our commitment with a substantial amount of cash: £28 million for redevelopment of the Lewisham hospital; nearly £20 million to develop the Homerton as a full district general hospital serving the people of Hackney; nearly £15 million for the London ambulance service—

Mr. Spearing: Will the Secretary of State give way?

Mrs. Bottomley: I heard the hon. Gentleman's intervention in the speech of the right hon. Member for Derby, South and I shall consider it carefully. I greatly appreciated our lengthy and informative discussion on the subject earlier in the year.
We are spending more than £8 million to upgrade and expand the accident and emergency department at King's—

Mr. Spearing: Will the Secretary of State give way?

Mrs. Bottomley: No, but I look forward to reading the hon. Gentleman's speech in Hansard later.
We are spending £3.2 million on the St. Thomas's accident and emergency department; £2 million for the Whittington; and nearly £2 million at the Royal London. [Interruption.] Opposition Members do not want to hear that list of investments and would rather drown it out, so substantial and significant is our record of investment in the London health service.
The list goes on and on, but the key issue is that it is investment in the future, not in the past, and it is close to where people live. We should not continue to sustain the current revenue cost of £70 million a year in duplication and fragmentation of an outdated pattern of hospital care. To do so would be unfair to the taxpayer, to other parts of the south-east and the rest of the country and to London when money should be targeted on basic health services in the community, which are so badly needed.
We have come to terms with the paradox that clinical developments point to a need for fewer acute beds. It is a paradox, and I understand hon. Members' concerns, but we see the development of day surgery, minimally invasive surgery, new drugs and other medical advances. All of those mean that we can treat more patients in fewer acute beds.
Because of those developments, the number of beds has been falling in the UK and elsewhere for the past 30 years. But fewer beds do not mean fewer services. There has been a massive expansion in the number of patients treated, reductions in waiting times and a transformation


in the range and sophistication of treatment available. In the past year, the number of people waiting more than a year for treatment in the Thames regions has fallen by 7 per cent. In a five-year period from 1988, the number of hip replacement operations increased by 2,500. During the same time, there was a fourfold increase in the number of liver transplants. The Labour party should know that it is simplistic just to look at the number of acute beds. We must consider how they are used and what that tells us about the balance between acute and non-acute beds and services generally.
The inner London health authorities' report concluded that the use of acute hospital beds is significantly above the national average. But there is no evidence to suggest that, on average, Londoners need to go into hospital more than people living elsewhere in the country. What the figures reveal is that the wrong beds are being used in the wrong way. Patients—particularly elderly patients—are being kept in hospital longer than they need be when they could better be discharged to proper care outside hospital, which is better for patients and for the NHS. For some, that will mean a nursing home. Evidence shows that, since our community care reforms, the number of nursing home places in London has begun to rise—200 more this year, but 1,800 more in the pipeline. That is a substantial increase in the number of nursing places for older people.
Local authorities have been well funded to meet their new community care responsibilities. This year, the London boroughs have received a total of £850 million for community care—more than one fifth more than in 1993–94. The funds available will rise by a further £95 million for 1995–96. The London boroughs are well placed to support a continued growth in nursing and residential facilities outside hospital. We look to them to discharge that stewardship in a responsible manner. As Professor Jarman has pointed out, we need more "low-tech" beds, as he calls them. It is because of the Government's reforms and the money that we have put back into them that the expansion in services is at last becoming a reality.
The right hon. Member for Derby, South referred to primary care. Sadly, primary care in London has lagged behind other parts of the country, but it would be quite wrong not to draw her attention to the very substantial improvements that have been made since the Acheson report. Of the 31 main recommendations of the report in 1981, 26 were implemented within 10 years. Between 1978–91, the number of general practitioners in London increased by a further 310 from 3,523 to 3,833. Many other recommendations were implemented: the retirement age for GPs; higher payments in underprivileged areas; standards for the reimbursement of rent of surgeries; screening for people over 75; and the co-ordination, by community health experts, of district health authority services for children. The right hon. Lady would be quite wrong to fail to recognise the dramatic changes that have been under way, but there is clearly a need to do even more.
Over the past two years, we have already invested an additional £125 million in primary care, which is creating and supporting more than 1,000 projects in London's areas of greatest need. A transformation is under way. There are more than three times the number of practice nurses as five years ago. The GP contract, introduced in

the face of bitter opposition from the Labour party, has brought an increase in child immunisation and cancer screening, of which my hon. Friends are so proud. Above all, the GP contract brought in extra payments for family doctors working in deprived areas. What hypocrisy it is for the Labour party to lecture us about poverty and ill health when it opposed that measure in the House.
Despite those achievements, however, there is more to be done. I am pleased to be able to announce that we shall be investing a further £85 million in primary care initiatives in London's most needy areas in 1995–96. That is a substantial sum. I know that my hon. Friends who represent areas outside London want it to be wisely and well spent, but it will enable us to implement our key objectives—to improve GP practices and other primary care premises; to increase the range of services that GPs can offer their patients; and to assist the development of health teams working in the community. It will include an investment of £20 million over two years in a new education programme for London GPs.

Ms Glenda Jackson: Will the Secretary of State give way?

Mrs. Bottomley: I do not intend to give way again. I have already given way many times, and I know that my hon. Friends are keen to speak. I am normally rebuked for giving way too much, so I hope that the House will bear with me.

Mr. Corbyn: On a point of order, Mr. Deputy Speaker. We rarely engage in debates on London's health. If the Secretary of State is not prepared to give way, how on earth can we use our one opportunity to question her directly about matters of deep concern to all hon. Members?

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): I said from the Chair the other day that I had long waited to hear a genuine point of order. I also said that it was very unlikely that I would do so in the near future, but that I lived in hope. I am not very satisfied with what I have heard today.

Mrs. Bottomley: I am between the devil and the deep blue sea, Mr. Deputy Speaker. I should make it clear that I regard the Chair as the deep blue sea and the Opposition—otherwise. Madam Speaker often severely rebukes Front Benchers for speaking at great length. I realise that I have already spoken for longer than the right hon. Member for Derby, South, although I think that I have given way more times than she did, but we shall consult the record tomorrow.
The issues involved are enormously important. We want to introduce improved training programmes to attract and retain high quality family doctors, and to improve opportunities for GPs to maintain high standards where they are needed most. We are also considering further steps to help, in particular, smaller practices to recruit and retain practitioners and assistants. We want more and better GPs, providing better services; we want in London family doctor facilities and community teams of the range and quality that are already common elsewhere. We want more of the fundholders who have been the pioneers of change in primary care. I am pleased to say that we expect London and the south-east to match the rest of the country by April, with some 40 per cent. of its population covered by fundholders.
I also welcome the prospect of GPs forming groups to purchase services for their patients, and the news that Professor Jarman and others are to join the central London multi-fund.
We are targeting people with specific needs—the elderly, the homeless and people with mental health problems. In the current year, £10 million of additional money is being invested in better services for the mentally ill in London. I can also announce that at least the same amount will be available again in the coming year for the special needs of people with mental illnesses. A vast range of programmes is now in place around the capital to improve care in the community for mentally ill people.
There are schemes such as that run by the Hackney Sanctuary, which provides crisis support to help avoid the admission of patients to acute hospital beds, and there is a new residential scheme in Camden and Islington. There are other schemes in Hounslow, Lambeth, Hammersmith, Greenwich, Haringey and Croydon; throughout London there has been rapid investment in practical schemes to help those with mental illness cope in the community. Time and again, Opposition Members re-emphasise their commitment to the principles of care in the community; I ask them to recognise all that is being achieved, and to acknowledge that more will be done because of the extra money that the Government are committing.
I feel that, as we are discussing important and serious issues, I should set out. what is happening, what has been achieved and the issues that remain to be tackled. My hon. Friend the Member for Carshalton and Wallington (Mr. Forman) referred to the importance of education and research. Those are fundamental to the reputation of London as a world leader in medical teaching and research. Bringing the different specialist centres together in the way that I have already described is difficult, but it is a vital part of securing the long-term objective.
The synergies which consolidation brings will help research thrive. Formal academic integration of pre-clinical medical education with the basic science faculties of the university of London will enhance the range of options for students, researchers and clinicians. [Interruption.] It is noteworthy that the Opposition greet with mirth and merriment issues that for many years have concerned Lord Flowers, Lord Annan and the vice-chancellor of London university. People feel deeply about these issues and they should be given proper priority as the changes take place.
We are working towards our vision which is based on four world-class hospital complexes clustered around four world-class colleges. The multi-faculty colleges will provide the engine room of basic science. This will be carried through in their associated medical schools and hospitals into clinical science and clinical research. It will allow the benefits, for example, of new advances in molecular biology and genetics—advances pioneered in this country—to have practical results in the care of patients.
We are making strong progress. All undergraduate medical schools proposed for merger are now committed to merge and are making plans to bring this about. The Institute of Psychiatry, associated with the Maudsley hospital, has entered into a formal association with King's college. A private Bill to enable the merger of King's college with the united medical and dental school of Guy's and St. Thomas's is currently passing through another place.
The Maudsley is the world's pre-eminent research institution of its type. People are already coming from all over the world to work there because of the great opportunities that it offers. Imperial college recently announced agreement by the Charing Cross and Westminster medical schools, the National Heart and Lung Institute and the Royal Postgraduate Medical School to merge with Imperial and the St. Mary's medical school to form a new Imperial medical school. The new school will make a significant contribution to both undergraduate and postgraduate education and to research. It will contain several teams of the highest international standing. These proposals will forge a brilliant alliance between some of our top clinical researchers and Imperial's scientific and engineering excellence.
The merged college will be focused on a new basic and life sciences building to be built at Imperial's Kensington site. The financial case is still being examined by the Higher Education Funding Council. However, I can announce to the House that I am prepared in principle to commit a substantial capital contribution to the scheme. As a result of this work, and the money with which the Government are prepared to back it, the new school should be admitting its first students in the autumn of 1998.
Our policies are also working to underpin the international reputation and excellence of University college hospital. It is making good progress in its association with the institutions based in Queen's square and has recently completed a financial case for the development of the Gower street site. This proposal has strong support from the academic and clinical community. I hope that formal consultation on the resulting service changes will begin before Easter.
I also commend to the House the private Bill which would enable the merger of Queen Mary Westfield college with Bart's and the London hospital medical colleges. These multi-faculty colleges with their clusters of hospitals in London will be ideally placed to take forward the highest calibre medical education and research. The critical mass of expertise within each centre will allow the widespread dissemination of best clinical practice.

Mr. Jim Dowd: On a point of order, Mr. Deputy Speaker. The Secretary of State has been speaking for 40 minutes. I accept that she has taken a number of interventions, but in the spirit of Jopling—

Mr. Deputy Speaker: Order. That is not a point of order and the hon. Gentleman knows it. This is a limited debate and many hon. Members wish to take part. Interventions of that nature do not help.

Mrs. Bottomley: I am coming to the end of my speech, but it would be wrong for the House not to be aware of how much is happening in terms of the investment in primary care and mental health services and how vital is the consolidation of medical research and teaching if we are to take pride in our national health service for the century ahead.
The Government will not shy away from what must be done. We utterly reject the Opposition's vacillation and evasion. We will have no truck with their moratoriums, their counsels of delay. We reject their plans for a health service run by councillors, which would inflict on our hospitals the same unholy alliance of bureaucrats and


councillors as we saw in the Greater London council, which left thousands of Londoners isolated in inner London despair. As The Economist said:
The choice, after all, lies between preserving Victorian glories and providing better health care for Londoners.
London deserves a health service that is fit for the 21st century. Much hard-fought ground has been won, momentum has been generated and much has been achieved. We wish to carry the services forward, accept the change and bring an end to uncertainty in the interests of medical research, staff and patients in London and throughout the country.

Ms Tessa Jowell: I tried about half a dozen times during the Secretary of State's speech to ask questions, but I regret that she did not give me or a number of my hon. Friends the opportunity to intervene.
On Saturday night, I visited five accident and emergency departments; it is in those departments that pressures are most felt, because of lack of beds. I visited King's College hospital, which is used by most of my constituents, Homerton hospital in Hackney, North Middlesex hospital, Chase Farm and the Whittington, which is my local hospital. Each one except the Whittington was having what was described as its quietest night for weeks. As one sister put it, "Usually by now patients and trolleys are everywhere, coming out of the woodwork. It is chaos."
Each hospital had free beds. For example, the Homerton had 10 beds when I arrived but during the 45 minutes of my visit, five were filled. I was told by one of the sisters, "On a night like this, we do a little better than just cope." That is what is happening on an easy night in London's accident and emergency departments. In every hospital, the staff thought that they were having an easy time if they had any free beds at all. In each hospital, the circumstances of the past 12 weeks were described as barely tolerable for staff or patients.
On 24 January, at King's College hospital, there were 19 trolleys, each with a patient waiting for a bed to become free. On 6 February, also at King's, there were 15 patients waiting on trolleys. At the Homerton two weeks ago, 26 people could not be found beds and at the Whittington the weekend before last, an extra 37 beds had to be put up. During my visit, the staff thought that they were having a quiet night because the pressure was off, but only one of the hospitals had an occupancy of less than 98 per cent. The inner London chief executives' report, to which the Secretary of State referred, accepts that that is too high and that hospitals should aim for a bed occupancy of 85 per cent. if they are to deal with the fluctuations of demand. Ministers believe that better bed management will be the solution to the bed crisis.
One of the reports that accompanied the inner London chief executives' report made plain what passes at the moment for a bed management strategy. The report states:
In most cases action is taken as occupancy approaches the hospital's 'danger' level".
It refers to
the early discharge of patients by consultant led ward rounds…Clearance ward rounds were a common feature of hospital life … The cancellation of elective admissions or the restriction of elected work to urgent cases only … Use of the EBS system

that is, the emergency bed system
to restrict the hospital to its catchment area or to medically refereed cases".
I have the latest figures for the emergency bed system, which show a 100 per cent. increase in the number of patients admitted as a result of being medically refereed for the month of January— the intolerably pressurised month referred to by so many of those to whom I spoke on Saturday.
The report continues:
Treat and transfer arrangements were not a common response. Experience suggested that in times of bed shortages other hospitals were generally unable to provide cover.
The report says that mixed-sex wards, and even mixed-sex bays, are now common. It points out that the transfer of patients between wards and, in some cases, between sites make compliance with the patients charter named nurse standard difficult. It also says:
Putting up extra beds and the opening of closed wards and bays at very short notice were reported by most inner London Trusts
There was also the
Use of day or 5 day surgery wards for medical emergencies".
That is how hospitals are getting by; they are just coping day by day.
At the same time, the Secretary of State has introduced a new patients charter standard—70 per cent. of trolley waits to be admitted within 90 minutes of the decision to admit. Another patients charter standard about to be implemented is that of choice—for elective patients to choose to come into hospital to a mixed-sex ward, or to choose not to come into hospital if the only bed available is in a mixed-sex ward or mixed-sex bay.
What the Secretary of State will not do is accept responsibility. She sets those standards but then walks away from them. She says that it is all the responsibility of the purchaser, while taking even more money away from the purchasers, whose hospitals have to resort to trolleys and mixed-sex wards only because the right hon. Lady will not fund them to open the beds that her cuts have forced them to close.
The pressure is not just on acute beds hut, as was recently reported, on intensive care beds—and with tragic consequences. Out of the hospitals that I visited on Saturday, on a quiet night, only two intensive care beds were available.
All this has resulted in another sort of folly. I shall cite a specific instance of the problem being encountered by one of my constituents, who is a consultant at Bart's. For the past two weeks he has been trying to operate on a 75-year-old woman who has a desperately serious form of cancer. She has been in hospital for three weeks being prepared for major surgery. The first time her operation was cancelled was just an hour before it was due to take place, because the intensive care bed that had been booked for her had been taken by another patient. Exactly the same happened again last week and there are now real fears that her condition will begin to deteriorate.
The problem is that there are four high-dependency beds at Bart's that have never been opened, thus requiring intensive-care beds to be used when patients could be better and more appropriately nursed in high-dependency beds. That sort of folly is putting patients' well-being at risk and sabotaging the best efforts of dedicated staff.

Mr. Spearing: I am grateful to my hon. Friend for giving way, unlike other hon. Members on occasions.


Does she agree that the nub of the matter is the responsibility of the Secretary of State? Can my hon. Friend suggest any reason why evidence given to a Select Committee on the serious matter of the London ambulance service should not, after examination by the Secretary of State, be the subject of a reply from her to any hon. Member pointing out points of logic and matters of fact? The Secretary of State has a responsibility to do that and she should have said so during her speech.

Ms Jowell: My hon. Friend has made an important point. What causes us so much frustration, and what causes so much frustration and anger throughout London, is the extent to which the Secretary of State appears to have abdicated all responsibility for the chaos that she has created.
Every night, the folly of Ministers in refusing to accept the evidence is played out in the suffering of patients and the shattered morale of exhausted staff. All are victims of a Secretary of State who prefers to believe her own fairy-tale view of the world rather than confront the reality that she has created.
Florence Nightingale gave her name to the organisation of wards with beds in long straight lines—something that persists in some of our hospitals today. The Secretary of State has given her name to another sort of ward—the Bottomley ward, where patients on trolleys are lined up in corridors waiting for beds to become free.
What is also clear, and what was made patently clear to me during my visits on Saturday night, is that the confidence of both patients and staff has collapsed. So much for the primary-care-led national health service. Patients are voting with their feet. The loss of confidence among them means that instead of going to their general practitioners and facing what they know will he a long wait before a hospital appointment is offered, they short circuit that delay and go to the accident and emergency departments because they believe that that is the only way that they can be guaranteed seeing a doctor.
There is also evidence that 999 ambulance calls are not always appropriate, but again it is for the very reason that people have no confidence that if they go to their doctor they will be referred to hospital before their condition becomes worse. They believe that the only sure way of getting into hospital is to phone for an ambulance to take them there.
There also seems to be evidence of a loss of confidence among general practitioners, which is shown by the increasing tendency to make an immediate decision to refer a patient to hospital. A few years ago, doctors might have kept patients under review for hours or days. However, they now know that their patients will have to wait, so they feel that it is better to get them on the list early.
What is so dreadful about all this is that it is a direct result of ministerial action. The Government have gambled on the possibility that improved primary care will reduce the need for hospital beds. There is no evidence that that is the case; indeed, the contrary appears to be true. They have gambled on the belief that more work will be done on a day-care basis, thus reducing the need for in-patient beds. In fact, all the evidence shows that premature discharge after a day's surgery results in a rise in the rate of readmissions. The cynics would say that that might not be very good for the patients, but it increases the number of finished consultant episodes. That number goes up every time a patient walks through the door.
Hospital beds are being closed before the alternatives have been properly developed and their effectiveness tested in practice. It is a chaos of the Government's making, even on a quiet night in accident and emergency departments in London. As one sister put it:
You want to do your best for patients but you can't, the pressure is too great, sometimes you cannot even get a patient a drink. We did not train as nurses only to be able to put sick people on trolleys.
If the Secretary of State continues to refuse to listen to the voice of the Opposition, or to the evidence that confronts her every day, perhaps she will consider the evidence in a report she commissioned from inner London chief executives. It said:
On the basis of the evidence presented to us there are reasons for anxiety about the ability of the system to cope with a further round of bed closures without action to improve throughput and particularly arrangements for the care of the elderly.
I offer the Secretary of State another piece of advice. It comes from Robert Maxwell, in a press release about a report to be published by the King's Fund on Wednesday. He says:
The pacing and sequence of change must take top priority. Because there is so little margin for error, there should be no reduction in services—whether for those with acute conditions, for continuing care of elderly people, or for those with mental health problems—until alternatives are in place. Accident and Emergency departments should not be closed until other ways of dealing with their work load are secure.
That simply is what we are asking for. We are asking the Secretary of State to accept the advice provided by her own inner London purchasers, and to open the beds that she has closed to relieve the intolerable pressure on the patients of London.

Mr. Roger Sims: The motion invites us to recognise
the Government's failure either to assess the health care needs of the area properly or to plan a programme by which those needs can be met".
I suggest that, in her speech, my right hon. Friend the Secretary of State for Health effectively refuted both those contentions. The facts and figures that she produced showed that needs have been assessed and that plans have been put in hand to meet them. The assertions in the motion are not true in the part of south-east London with which I am especially familiar—my constituency Bromley. What is happening in Bromley is not unique.
The health authority and family health services authority in Bromley have been working as one for several years, chaired by a very able lady and a most effective board of directors—which include a prominent local member of the Labour party—and run by a professional and energetic chief executive. Bromley health authority has assessed the needs of the local community and it has planned and begun to execute a programme to meet those needs.
Bromley health authority has carried out extensive surveys of the population, their health and their mobility. It has assessed the population's diverse health needs. It has undertaken public consultation and it has organised public meetings and private groups—a process that is continuing with small groups of local people being invited to show their expectations of local health services. As a result of that process, it has developed, among other things, a local rest care service. It has brought plastic


surgery consultants into local clinics. It has established a local alcohol detoxification service, run by a voluntary body, on whose management committee I sit. The authority has established local mental health teams and devoted extra resources to help promotion. All those policies have stemmed from local consultation.
The health authority has been pursuing the targets in the patients charter, especially in relation to reducing waiting times for both in-patients and out-patients. It has encouraged the use of day surgery. It has had to handle reduced funding, resulting from the operation of the weighted capitation formula, but it has remained within its cash limit and within its budgets. A part of the reason for that success is the operation of the internal market, criticised frequently, and in their motion, by the Opposition.
Bromley health authority has been able to improve the terms of the contracts that it has negotiated, both in the health authority area and outside it. For example, it has been able to save some £500,000 on placements in nursing and residential homes, without reducing the number of placements. The bulk of treatment is undertaken in the health authority area in four hospitals, some of whose facilities are in old and out-of-date buildings. Our great need is to have one modern, fully-equipped acute general hospital.
My right hon. Friend the Secretary of State will be aware that plans are well advanced to redevelop Farnborough hospital to produce a new hospital with the latest facilities for acute services, and with a modern accident and emergency department. I hope that, when those proposals come to her desk, she will give them a favourable response, so that my constituents can have the service to which they are entitled.
Even when we have our acute general hospital, and notwithstanding changes in the pattern of medical provision, which my right hon. Friend outlined in her speech, some patients from outer London and further afield will still come to inner-London hospitals, including Guy's hospital, for specialist treatment, as they have been doing for some years. I remind hon. Members that, some years before the Tomlinson proposals, discussions had been taking place between both administrative and clinical staff at Guy's and St. Thomas's hospitals to affect a rationalisation of services and a better use of the resources available. Those discussions, however, did not come to any consensus and, 12 months ago, my right hon. Friend the Secretary of State stepped in and issued what I think was described as a strategic direction.
I give my right hon. Friend all credit for at least doing something to try to break the logjam, but the more I consider her decision, the more I fear that it may have been based on inadequate and inaccurate information. The effect of her direction would be to close the accident and emergency department at Guy's, to move most in-patient services from Guy's to St. Thomas's, and to make Guy's mainly a teaching and research hospital. Not surprisingly, there was widespread reaction to those proposals, and it led to the setting up of the "Save Guy's Hospital" campaign, chaired by the hon. Member for Southwark and Bermondsey (Mr. Hughes), the local Member of Parliament, and co-chaired by the hon. Member for Dulwich (Ms Jowell) and myself. Hon. Members will be

aware that, among other things, the campaign promoted a petition that attracted well over 1 million signatures, and that was presented in the House just over a year ago.

Mr. Simon Hughes: It was presented just over a week ago.

Mr. Sims: I apologise—it was presented just over a week ago. It is a year that we have been working on this matter. The proposals and alternative suggestions have been the subject of detailed discussion and debate.
In the interests of other hon. Members who wish to make speeches, I shall not detain the House by going through all the considerations, but I shall make three points. First, hundreds of my constituents, and many of the constituents of my hon. Friends, travel daily to, and work in, the City of London. Surely the City needs an A and E department not only for the everyday accidents and illnesses that occur whenever a large number of people are gathered together, but for major incidents such as a terrorist outrage or a train crash, which might happen at any time in the City. With the closure of the A and E department at Bart's hospital, the continuation of an A and E facility at Guy's hospital is essential.
Secondly, thousands of patients throughout south-east London and, indeed, south-east England, are referred for specialist consultation and treatment to Guy's. They, their relatives and their friends have maximum ease of access to that hospital, which is sited literally next door to London Bridge station, with rail services throughout the south-east, and to a large bus station. Apart from all the other considerations, closing the facilities at Guy's and moving them to St. Thomas's would be very much to the disadvantage of a substantial section of the south-east England community. One feature of the Guy's site is Philip Harris house, to which reference has been made. It was designed and equipped specifically to provide the latest treatment and specialist services at a cost approaching £150 million. Surely it cannot be right not to use that building for the purpose for which it was constructed and equipped.
The "Save Guy's Hospital" campaign commissioned KPMG to report on the implications of the proposals and to suggest alternatives, and the campaign made its own proposals. They are being considered and will reach my right hon. Friend's desk in due course. I realise that she cannot comment now, but when it is time to reach a decision, I hope that my right hon. Friend will meet me and hon. Members from all parts of the House, together with those particularly concerned, to hear our views. I am sure that my right hon. Friend and my hon. Friend the Minister of State want, like me, to ensure the best health care for the people of London and the south-east.

Mr. Simon Hughes: I am grateful to be called, and grateful to the Labour party for choosing this subject for debate. We have been around this circuit before, but clearly it is necessary to go around again.
It will not surprise the Secretary of State and the Minister to hear that health care is chief among all the issues that currently preoccupy my constituents. That issue probably preoccupies Londoners most, too. Saturday's conference at the Queen Elizabeth II centre,


organised by the Evening Standard, was attended by more than 1,000 people. That shows the interest and concern of the people living in our capital.
The hon. Member for Chislehurst (Mr. Sims) pointed out that that concern about London health care does not stop at the Greater London boundary. Traditionally, concern about London's health services is felt throughout the country and all over the world, because patients, students and practitioners are all part of the global network on whom the London health service has always depended and will continue to depend.
At present, there is a dialogue of the deaf. The motion say that there is a
continuing crisis of health care in London".
The Government answer, "Oh, no, there isn't." The Government say that the health service is getting better. That gets the response, "Oh, no, it isn't." Somehow, the messages are not getting through.
However well the Government think they are doing, they have not persuaded the public—certainly not in the capital—that they are doing well.

Mrs. Barbara Roche: Is the hon. Gentleman aware that one of my constituents, a man of 78, had a prostate operation at the Whittington hospital cancelled because of lack of funds, and has been given no future date? While such incidents continue, the Government will find it impossible to persuade the people of London that they should have confidence in the capital's health service.

Mr. Hughes: Such incidents certainly lower confidence in the system. To be fair, the Government understand that. Recently, waiting lists in London have grown—there is no argument about that. Both the number of people on the lists and the time that they must wait have increased.
The public think that more money should be in the kitty for the national health service. I appreciate that this is not principally a decision for health service Ministers, and we heard an announcement today about more money, which is welcome. The Government must not be troubled by any belief among the public that money should not be spent on health care delivery, because the opposite is true. Opinion polls show that 80 per cent. hold that view. However, the public are suspicious about the £1 billion spent on the management sector of the NHS.
I am not arguing that London should get more than its fair share of the cake. A fair share is, of course, difficult to determine. It should be based not just on residence but on the number of outsiders who use the London health service—the hon. Member for Chislehurst and others spoke of such referrals. People are still not persuaded that the recently revised weighted capitation formula is just. It is not understood, and many suppliers and purchasers do not think it is fair. My local health commission believes that it should be given another £100 million a year. The money that is available is not shared equitably. The capital has a huge mix of deprived and not-deprived areas, and funds do not seem to reach deprived areas to anything like the extent they should.
The problem is not a lack of facts or accurate facts, but, because of their complexity, the facts are subject to all sorts of interpretations and misinterpretations. It is crucial that decisions are based on up-to-date, accurate facts.
Of course the Government's amendment is true to some extent, because Greater London's population has been declining. Of course it is right that people who do not need to come London are treated elsewhere. Of course there have been desperately needed developments in primary care. When the Minister visited my constituency, he saw a much better GPs' surgery than before, when it was in an old building down the road. However, we cannot spend more money on primary care—which I welcome—to the detriment of necessary acute care for Londoners whose acute care centre is the district general hospital.
If the figure for beds per capita in London is lower than the national average, and if waiting lists are larger and longer than the national average, I hope that the Minister agrees that the question is not the number of beds that exist but the number needed. At present, London does not have the beds it needs. I accept that fewer are needed than five, 10 or 20 years ago, but the current number is insufficient.
Beds are often 100 per cent. full. The inner-London chief executives have just said that 85 per cent. was a safe bed occupancy rate. The hon. Member for Dulwich (Ms Jowell) said that that is rarely, if ever, the case. I argue not for an ever-increasing number of beds but for enough, and not to make it look as though more patients are being treated by throwing others out so quickly that they must be readmitted the next day or week—particularly the elderly—because they are prematurely discharged and returned home for inadequate care.
I do not oppose the idea of a review and of the Government saying, "We must grab the problems of London's health service by the neck and solve them." What I oppose is the fact that decisions are taken on the basis of information that is inadequate or inaccurate, and which is not then brought up to date.
I give a specific example. Professor Tomlinson now says that he was not given all the information he needed. The most contentious example is the fact that when he was shown the trend in the number of people admitted to hospital beds, he was shown only the figures for the most recent months before his report, and was not shown the figures for the period before that. The figures for the couple of months before the report showed a downswing, whereas the previous year's figures showed a consistent increase. Such a misunderstanding, which was not Professor Tomlinson's fault but a result of inaccurate information, led to conclusions that are now working their way through the system.
Since then, Professor Jarman has shown that Professor Tomlinson was wrong; Professor Tomlinson has admitted that he was in part wrong. In the past couple of weeks, the inner London chief executives have brought matters up to date since Jarman. On the radio this morning, the Minister said, referring to Tomlinson:
nothing has really changed since then.
Some things have changed, and I can prove that to him. In addition, some of Professor Tomlinson's conclusions were wrong because he was misinformed.
Let the Minister have his review, and let him look at the evidence. I do not think that he is acting in bad faith. Let his evidence be accurate, and let it be updated by the facts. The review will then have the confidence of the people of London. The analysis must be right, and the changes must be brought into focus and accurately


represented. For whatever reason, many more people have gone into accident and emergency units in the past year than in previous years. I do not know why, but I know that it is a fact. If it is a fact, it must be taken into account.
I am not here to defend vested interests in the professions. However, specialists, who are perceived by the Government to have vested interests, are often specialists in great institutions, which are not only great institutions, but the places that treat the poorest and the most deprived in our communities. They are the most important institutions.
I have no compunction about saying in the House that the most valuable building in my constituency is Guy's hospital. Unarguably, it has done the most good for the most people over the longest period. The patients and the taxpayers are the only vested interests about which I am concerned—the people who pay for and use the service. What do they want?
The people who pay for and use the service want large hospitals for specialist services. I understand all the arguments about that and I understand that having small accident and emergency units without adequate back-up is no good. However, there is no theological answer to the question of what the right size is.
Above all, a different view should be taken about accident and emergency departments. Other specialties are much more high-tech and can be more limited in number around the country. There should not be replication of a service, whether oncology, renal services or paediatric services, between one hospital and the hospital next door, because that would be a waste of resources. There should be rationalisation and consolidation.
However, services that the community needs should be located where the community is. It is no good—taking the argument to its logical conclusion—having a massive hospital with wonderful facilities that is not near enough to be of use to the people it is meant to serve. One cannot make decisions irrespective of the location of the communities and the users.
There is one other point about which I want to persuade Ministers. All acute general hospitals should have elective beds—beds that are not used for emergencies, to which people can be admitted to have operations for which they have waited. People should not have the experience of the constituent of the hon. Member for Hornsey and Wood Green (Mrs. Roche), who kept being told that he could not come in because of emergency cases. All acute general hospitals should have ring-fenced elective beds.
London communities are just as entitled to community acute health care as all other communities. Let us assume that my constituency has the same population as the county of Herefordshire. No one argues that people in Herefordshire should go to Birmingham for less specialist treatment. They should get treatment in Herefordshire, and the same point should apply to London. London also needs low-dependency beds and—this is hugely important—nursing homes and residential homes where there are low-dependency care opportunities for the elderly. In inner London, there are hardly any.
I want the Government to get things right. The problem is that people do not have confidence in the process because the precedent does not give them confidence. Many times, facilities have closed and we have not had a

replacement service to come to the rescue or, in many cases, a better service. People are, therefore, sceptical and need to be persuaded. Above all, if there is to be change, people need to know that the alternatives are in place and that they are working well.
I conclude with the example about which, as the Minister knows, I am most concerned.

The Minister for Health (Mr. Gerald Malone): I have listened with interest to the hon. Gentleman, and I underpin his point that the momentum needs to be maintained. Before he moves on to what I know to be a subject close to his heart, would he tell the House what he thinks about Labour's proposal that there should simply be a review and a total moratorium?

Mr. Hughes: I can answer that question. I do not think that we can ever have a standstill, because the patterns of health care and of need never stand still. I am not arguing that we should stop everything for an indefinite period. I am arguing that there should be a perpetual review, with periodical decisions every five or 10 years, so that everybody knows what we are talking about.
At the moment, we should work within a timetable set by the Government; they are perfectly entitled to set such a timetable. I shall suggest how we could take decisions in a way that would achieve the right results. I am trying to be helpful, because I believe that we have to break through some of the traditional failures in the health care structure in London.
We must have decisions that command confidence. I take the example of Guy's and St. Thomas's. According to the proposals, the accident and emergency unit at Guy's will not be run down until 1996 at the earliest. Ministers can go with the existing proposals and say that they will not look at things again. They can say that they will close the unit and that the provision will shift. That is setting one hospital against another. Such a decision set Bart's against the London hospital, and it is now setting Tommy's against Guy's. The decision sets people against each other, because it is taken by a few people behind closed doors.
Alternatively, Ministers could say, "This is the total money you will have. You work it out. You decide what your priorities are and where your services should be." The great benefit of that would be that the hospitals would have to work together and come to a conclusion. The Minister could say to us in south London, "This is the money; you will not get any more, because of the way in which the contracts work. You make the decision."
I guarantee that the GPs, the community health councils, the Members of Parliament, the local councils and the community would agree to make that decision. We would make decisions to rationalise across the Guy's and St. Thomas's sites, but we might well decide that the priority was to open Philip Harris house for its full purpose, and to keep accident and emergency units on both sites.
I now turn to the reason why Ministers have to get it right. I am trying to help them not to get it wrong again. On 25 July 1991, the Prime Minister wrote to Peter Griffiths, who was then chief executive of Guy's hospital. He said:
Thank you so much for helping to make our visit yesterday to Guy's Hospital such a successful and memorable occasion.


It was most interesting to learn more of the Guy's and Lewisham trust and its work. I was also struck by the positive attitude of not just the Board or senor management, but of all the staff I spoke to. I am sure Guy's will continue to lead the way in the development of the Trust concept throughout the county.
Norma and I would be grateful if you could pass on our congratulations to all those who helped to organise yesterday's 'Topping Out' ceremony and visit.
That letter was written four years ago. Today, there is not wonderful morale at Guy's hospital, there is not great confidence that it will lead the world in the development of the new flagship concepts of the trust, and the local community does not feel reassured.
On 6 February, a note was sent internally to directors by two people in the local health commission, entitled "Meeting the Needs of the Residents of Bermondsey and Rotherhithe". In summary, it said:
We have demonstrated that the proposed acute changes will in the short-term make the poor health care provision in Bermondsey and Rotherhithe worse.
There is no excuse for the Government making decisions that make things worse. I hope that they will listen to those of us who are trying to ensure that they do not make mistakes, so that, for everybody in London, especially those who use the London health service, the health service can be better, as—I hope—we all wish to see.

Mr. David Congdon: I welcome the debate. It is the third one on London's health in the past 10 months. It is unfortunate, however, that Labour Members have deliberately sought to exaggerate the problems in London to try to give greater force to their argument. I intend to outline what I consider to be some of the problems, because it would be foolish to try to pretend that there are no problems when change is being engineered and implemented in the capital city.
Any changes on the scale outlined in "Making London Better" and before those in the Tomlinson report, were bound to cause a degree of uncertainty. Change always causes uncertainty, and always causes fear. That has not been helped by Opposition Members—and, dare I say, some consultants and doctors in the hospitals concerned—whipping up that fear. It has made it much more difficult to conduct a rational debate on the important health changes in London.
No one likes to see great institutions under threat of closure. My plea to the Minister is that, while we must rationalise the provision the London—I shall say why in a moment—we should tread very carefully before we succumb to grandiose schemes involving millions of pounds of capital expenditure, on a wing and a prayer that they will lead to minor revenue savings.
I do not want to develop that point too much, but I make it with particular reference to proposals for St. Bartholomew's and the Royal London, which involve £250 million of capital expenditure. Coming from an outer-London borough, where we have always pressed for further developments in our district general hospital, as indeed has Bromley, the neighbouring borough, I repeat that we should tread with great caution before we accept such grandiose proposals.
We must also recognise that the status quo in London is not an option. It was interesting that the right. hon. Member for Derby, South (Mrs. Beckett) did not say that this afternoon, unlike her predecessor, the hon. Member

for Sheffield, Brightside (Mr. Blunkett), and, indeed, Baroness Jay. Most people involved in the national health service and with an interest in health matters have recognised for many years that there has been an over-concentration of teaching hospitals and resources in inner London. To one who represents an outer-London constituency, that has been only too apparent on the ground, since outer London has far fewer health resources than inner London.
There has been much bandying about of statistics, yet they appear to be a moveable feast, as reports are published two to the dozen. As far as I can make out, spending in inner London, as quoted on previous occasions, has been 47 per cent. above the national average per person, excluding spending on the special health authorities. Including spending on special health authorities, the figure rises to 57 per cent.
Much play has been made of beds. My understanding, again on figures previously quoted, is that in inner London there are 3.3 acute beds per thousand of the population, compared with a national average of 2.33 per thousand. Even today, in the second King's Fund London monitor report, which I received this morning and have studied at great speed to see if the statistics add up—

Mr. Nicholas Brown: They do not add up.

Mr. Congdon: The hon. Gentleman is right, they do not add up. The problem with the report is that it talks of London as a whole. None the less, it says that there are 8 per cent. more available acute beds per capita in London than there are in England as a whole. What is more significant is that 40 per cent. of those beds are in inner London. There is a preponderance of beds in inner London. We also know that the length of stay in teaching hospitals in London is 15 per cent. above the average for the provinces.
The right hon. Member for Derby, South made great play of the fact that, in a sudden surge of inspiration, she had managed to determine that somehow the figures for London were not valid, because London was no better off than comparable cities up and down the country. Yet we knew that, because it was clearly stated in the original King's Fund report, which preceded the Tomlinson report and "Making London Better".
Therefore, we are not debating London only, because the situation in London is comparable to that in other cities that also have to get to grips with problems. However, that does not negate the need to make progress in London. Despite all those figures—possibly because of the apparent over-provision—London has poorer primary care.
I shall address some other aspects of health care in London. I was very pleased that the hon. Member for Southwark and Bermondsey (Mr. Hughes) mentioned the funding formula, because I think that it is important. Again, it was interesting that the right hon. Member for Derby, South did not remind the House that the original changes to funding, which have affected London so seriously, go back an awful long time, to the doctor who was a Minister of State for Health, Lord Owen. He introduced the resource allocation working party formula, which took funds away from London. Certainly Croydon has suffered from that ever since.
There have also been recent changes to the funding formula which benefit Croydon. Whereas, before, the borough was about on target, it is now £6 million under


target. However, I was somewhat disconcerted to learn from figures that I received only today from the South Thames regional health authority that the South East London health authority, which was apparently £5 million under target, is now £4 million over target.
I urge Ministers to look again at the funding formula. I know that they have relied heavily on work done by York university, but there is still concern that too much weight in the formula is given to the age profile of the population and the number of elderly people, rather than to deprivation factors, which clearly have a significant impact on health spending.
We are well aware of the other pressures for change. The switch from secondary to primary care is leading each purchaser to reduce the percentage of funding it spends on secondary care. There is a welcome trend of more patients being treated near home. I know that my hon. Friends who represent constituencies outside London welcome the fact that their constituents do not have to travel to London for care, and that they can receive such treatment at their local district general hospitals.
We have also heard about the significant switch to day surgery. It is obvious that beds are not needed for day surgery. At my local hospital, the Mayday University hospital, 90 per cent. of cataract operations are now carried out on a day basis, much to the benefit of the patient. Micro-techniques have led to much less invasive surgery, which also means shorter stays in hospital. All those pressures justify the general strategic direction that the reforms and changes are taking in London.
I mentioned earlier the King's Fund, the Tomlinson report and "Making London Better". It was significant that "Making London Better" scaled down the figures for bed losses as outlined in the Tomlinson report.
Although it was not really a target, "Making London Better" refers to a bed loss of between 2,000 and 2,500 beds in inner London in comparison with the 1990–91 figure. In last October's debate, I drew attention to the fact that, if London could improve its efficiency of bed usage to the level of other areas in England, that target could be achieved easily. If London could reach the level of 14 beds per 1,000 in terms of the population in inner London, 2,700 beds could he taken out of the system.
That is not the end of the story. There is clearly a serious dichotomy between the strategic direction and analysis of the situation in London and what is happening on the ground today. I castigated Opposition Members earlier for over-exaggerating the problem. I believe that they do that, but it would be foolish to deny that there is pressure on beds in London.
One need only visit accident and emergency departments to witness the pressure that they are working under. I visited the A and E department at Mayday hospital recently. I did not visit at its busiest time, but it was very cramped. I am pleased that major redevelopment is going on at the moment to provide proper facilities. When facilities are cramped and there are problems with getting people into beds in hospitals, there is the dreadful phenomenon of people having to spend time on trolleys. That is clearly unacceptable.
The picture with regard to health in London is confusing, because it is rapidly changing. Reference has already been made to the report entitled "Hospital

Services for Londoners" by the inner London purchasers. The report makes several points. Interestingly, it refers to the fact that accident and emergency attendances had not changed significantly. That is surprising, because, from anecdotal evidence, some people had felt that A and E attendances had increased.
It is noteworthy that emergency admissions, whether via an ambulance on a 999 call, or via an ambulance bringing in an urgent case from a GP, have increased significantly. One of the difficulties that I have found with the inner London purchasers' report is that it does not provide the figures. It does not give the scale of the increase.
I am aware that my district general hospital, Mayday in Croydon, has seen an increase of 25 per cent. in emergency and urgent admissions in comparison to January last year. We have had a very mild winter this year. As far as I am aware, there has been no great spread of illnesses, such as a large epidemic of influenza, which would have had a significant impact on such admissions.
I do not know whether the increase in Mayday's emergency and urgent admissions is mirrored across London. I would be surprised if it was, because the figure is extraordinary and it cannot be explained by straightforward demographic factors. I urge my hon. Friend the Minister to ensure that that aspect is considered.
I wonder whether all A and E departments in London are pulling their weight and taking their share of cases that come their way. I wonder whether some are closing their doors from time to time, putting pressure on other hospitals. If that is the case, it would clearly be unacceptable.
While we are right to press on with the strategic drift of the changes in London, we must be cautious about losing further acute beds too quickly in London. I have received figures only today—today seems to be my lucky day—which show the bed position in London until March 1994. It would obviously be helpful if there were more up-to-date figures.
I was particularly interested in the bed loss figures in inner London. Compared with "Making London Better" and Tomlinson, and the target of 2,000 to 2,500 bed losses in five years, 1,400 beds have been lost in inner London. It is interesting that, between 1991–92 and 1992–93, the bed loss was comparatively small, but it accelerated between 1992–93 and 1993–94. It is possible that that, in conjunction with the implementation of care in the community, in respect of which we know that there is a problem in getting elderly people out of hospital quickly enough because of problems with discharge, is a factor in influencing the pressure on admissions to hospitals in London.
From talking to my district general hospital, my impression is that it is quite possible to reduce surgical beds even further, because of the advances in medical technology to which I referred earlier. However, it is difficult to reduce medical beds which tend to be used mainly by the elderly. Indeed, my hospital has had to open additional medical beds to cope with the demand, and I urge my hon. Friend the Minister to consider that aspect in more detail.
In addition to the inner London purchasers' report, the clinical studies advisory group has produced a very useful report into A and E admissions and how A and E departments should be organised. I refer to those two reports because they make important recommendations.
There is no doubt that there is a need to improve the management of A and E departments and to ensure that they have proper observation wards and, perhaps even more importantly, admission wards, so that people do not spend time on trolleys. The inner London purchasers' report states that some hospitals are operating to too tight a margin.
If there is very high demand in a hospital, particularly on the emergency admissions side, the inner London purchasers' report makes it clear that the occupancy level of beds must be lower than would otherwise be the case if the level of emergency admissions was lower. That stands to reason, because if a hospital caters primarily for elective surgery, with very few emergency admissions, it can plan for that, and it does not need the slack for emergencies. However, if a hospital has a very high percentage of emergencies, there could be a sudden surge, which could completely disrupt the hospital. That hospital therefore needs greater spare capacity.
The inner London purchasers' report states that hospitals should operate at a level of about 85 per cent. I do not know whether that is a good suggestion or a bad one, but it must be borne very carefully in mind. The report also suggests that, in assessing bed requirements, one particular formula to be applied across London is not necessarily the correct approach. The health authority should assess the needs in its area before reaching a conclusion about bed requirements.
The report makes another important point. We know that London has more acute beds per 1,000 of the population than elsewhere. Interestingly, it has fewer nursing home places. That causes more pressure on medical beds, and that is why we must proceed with caution before reducing those beds further.
The report by the clinical studies advisory group is interesting, covering issues such as bed management. That issue is crucial in any hospital. Too often, there are problems in getting patients on to wards. However, sometimes beds are being kept vacant by consultants. Hospitals must manage beds properly.
It is also important to ensure proper consultant cover in A and E. Too often, patients turn up in A and E and find that the more junior doctors are on duty.
The NHS does an excellent job catering for most people when they are ill. If one is seriously ill or in a major road accident, generally speaking one will be treated very well indeed. But it is not acceptable to have the main entrance to the NHS in A and E departments which are often not staffed by senior consultants and which are often short of facilities for getting patients out of A and E and into the main part of the hospital. That aspect of health care is critical, and it must be given priority.
I shall say a couple of brief words about some specific changes in London, of which great play has been made. There has been concern about the closure of Bart's A and E department,. but I am hound to say that, given that it catered for only 30,000 attendances a year, it was right to centralise facilities elsewhere. Indeed, those facilities have been expanded. I welcome also investments in A and E at various centres within London, including King's, the Homerton, and the Mayday in Croydon.
I do not think that there is a crisis in the health service in London. The changes that have been set in train are proceeding in the right direction. However, I agree with the hon. Member for Southwark and Bermondsey, who made the plea that responsibility for bringing about those changes in the configuration of particular trusts should be left to them, rather than be determined by the center—but with the one key reservation that I have mentioned.
I hope that my hon. Friend the Minister will not agree to massive capital injections where they are not necessary. I urge my hon. Friend to be cautious in relation to further acute bed reductions, given the evident pressures on beds at present. I am happy to support the amendment.

Several hon. Members: rose—

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): Order. We have 39 minutes before the winding-up speeches commence, and four hon. Members hope to catch my eye. I hope that they will be successful.

Mr. John Austin-Walker: The hon. Member for Croydon, North-East (Mr. Congdon) talked about Opposition Members whipping up fears, concerns and anxieties. If he had been at Saturday's conference, which was organised by the Evening Standard, to which reference has been made, he would have seen for himself that such fears, anxieties and concerns need no whipping up and that they are genuine.
I shall say something about the lack of strategic planning, control and accountability in London. I start with the London ambulance service. It has been apparent to the general public for many years that things are wrong with the London ambulance service. In 1991, I was involved in a report that was produced by the Association of London Authorities, entitled "London's Ambulances—a Service in Crisis". At about the same time, the National Union of Public Employees produced a report spelling out the difficulties that the London ambulance service faced. Those reports went to Mr. Wilby, the chief executive of the London ambulance service, and to the right hon. Member for Bristol, West (Mr. Waldegrave), the then Secretary of State for Health, and they did nothing about the matter.
We then had the computer crash in October 1992, when the Minister and the Secretary of State said that they would address the serious problems. Since then, we have had the Wells report, which confirmed what Opposition Members had been saying for a long time—that is, that there had been a history of underinvestment and a lack of funding within the London ambulance service. When the Wells report recognised that and made recommendations, the Secretary of State said that it was nothing to do with her and that it was a matter for the region.
I now refer to the contrast in accountability in the London ambulance service and the London fire and civil defence authority. My hon. Friend the Member for Holborn and St Pancras (Mr. Dobson) has called it a tale of two services. The London fire brigade provides a first-rate service; the London ambulance service does not. The London fire brigade meets its performance targets; the London ambulance service does not. The London fire brigade successfully introduced a computerised mobilising system; the London ambulance service did not. The London fire


brigade has successfully set about revising and improving its management structure and working practices, whereas the London ambulance service has not.
The difference between the London ambulance service and the London fire and civil defence authority is that the London fire brigade is accountable to a body of responsible elected representatives from each London borough. We would not have had the crisis in the London ambulance service if we had had the accountability that we have in the LFCDA.
The London ambulance service has an appointed board that meets in secret. Not only are its minutes not available, but its agendas are not available for inspection, either. I understand that its minutes were not even available to the Page inquiry, which investigated problems within the London ambulance service.
Let me deal with another aspect of the lack of control and the lack of accountability. My hon. Friend the Member for Leyton (Mr. Cohen) has been trying to ascertain figures for the number of hospitals in London that have closed since 1979 and the number of beds that have closed. He has had a very hard task of that within the Library, because he has been told that there is no central source of that information. The Department of Health does not even collect the number of hospitals any more, let alone details of their closures.
After much research, my hon. Friend the Member for Leyton found that between 1979 and 1993–94 the total number of NHS hospital beds in London fell by a staggering 49 per cent., from 64,850 to 33,120. Acute beds fell by 45 per cent. and non-acute beds by 53 per cent. That is one of the consequences of the Government's policies and one of the reasons why the crisis exists. Unlike the hon. Member for Croydon, North-East, I believe that there is a crisis within the health service in London.
I now refer to what some might think is a parochial issue, but it shows quite clearly the lack of accountability and the lack of control within the national health service in London. The catalogue of local disasters in the Greenwich area was put before the House in an Adjournment debate on 28 January last year. In that debate, I expressed my concern about the management of Greenwich health care trust. Indeed, my hon. Friend the Member for Greenwich (Mr. Raynsford) and I called for the chief executive's resignation. I felt that somebody should be responsible. Somebody should be accountable, particularly when that person, Mr. Bruce Joyce, appears to have been one of the 10 highest-paid chief executives in the country. I was pleased to learn from the new trust managers that Mr. Joyce had not claimed any performance-related pay when he left the service. What a pity. On the record of his negative performance, he probably would have owed us something.
I am disturbed to read, however, in the Woolwich and Plumstead News Shopper that a BBC documentary alleges that Mr. Joyce, who retired to spend more time with his family, received a pay-off of between £200,000 and £400,000. Unfortunately, no one at the trust was available to comment. The Minister is available tonight, and I await his comment with interest.
Let me now deal with a matter that I have raised with the Minister. In April 1993, the Brook hospital took delivery of a second-hand magnetic resonance imaging

scanner. In about September of that year, it came to my attention that the scanner was not working. It was alleged that there was something peculiar about the way in which the purchase had been arranged, that staff had not been properly trained, and that the scanner was incompatible with other equipment. I received assurances that the staff had been trained, that the scanner was compatible, that it was a shared purchase between the region and the Brook hospital, and that it was settling in and would be up and running soon. It was not.
I raised the matter with the Secretary of State on 29 October 1993. On the same day, I asked her how many beds had been closed and how many operations had been cancelled for financial reasons. The hon. Member for Bolton, West (Mr. Sackville), the Under-Secretary of State, told me that the Department of Health did not keep such information and that the scanner was nothing to do with the Secretary of State; it was
a matter for managers and clinicians".—[official Report, 29 October 1003; Vol. 230, c. 835.]
The Minister referred me back to the trust, which referred me to the region. The scanner—£500,000 of hardware—had still not scanned a single patient. On 18 January 1994, I queried the purchasing arrangements with the Secretary of State. That time, I was referred by the Under-Secretary of State to the chairman of South-East Thames regional health authority.
I raised the matter in an Adjournment debate in January 1994. Half a million pounds-worth of scanner was sitting idle while £116,000 a year was being paid to a private hospital to provide a scanning service. Eight months after the scanner was purchased, the Under-Secretary of State said:
I share the concern expressed by the hon. Member for Woolwich about the commissioning of the MRI scanner, but, following the trust's inquiries into the matter, we will ensure that any procedural shortfalls are addressed. I understand that a meeting is to be held shortly."—[Official Report, 28 January 1994; Vol. 236, c. 600.]
On 15 December 1994–18 months after the scanner was delivered, 15 months after I raised the matter with the trust, 14 months after I raised the matter with the Secretary of State and 11 months after the Under-Secretary said that a meeting was to be held shortly and that shortfalls would be addressed—Greenwich health care trust and the South Thames regional health authority put out a joint press statement that they would be disposing of the scanner, which had never worked. Following an independent district auditor's review, they admitted weaknesses in the procurement procedures, breaches of the region's standing financial instructions and weaknesses in the trust's management of the project. Both the chief executive and the chairman of the trust have now departed. At least the new incoming acting chairman, who inherited the mess and a variety of others, admitted that the episode had
hurt the Trust and the taxpayer.
It has been revealed that of the £416,000 purchase price, £117,000 came directly from the region and the other £299,000 came from Greenwich health authority's charitable trust funds. That one third of a million pounds was not taxpayers' money, but money donated by local people and grateful patients with an affection for their local hospitals. The money was often left in wills and legacies for improvements to local health services and added comforts for people at local hospitals.
That piece of equipment—although installed in a local hospital—was not for a local purpose. It was for the region's specialist neurosciences department, which the region and the Secretary of State had already agreed should move to King's College hospital in Lambeth in the spring of 1995. Why was the local health authority inveigled by the region into using local charitable moneys for a regional service that was about to transfer out of the area?
I have asked the region to reimburse the local charitable funds, but the regional chairman tells me that that would be impossible as it would be ultra vires. But if the region breached its own standing financial procedures, and that went unattended by the Secretary of State for so long, was not the purchase ultra vires in the first place? If the region cannot reimburse the funds, I believe that the Secretary of State should.
I shall refer briefly to psychiatric services. It is a year since the report into the Clunis affair, and a year since the Health Select Committee published its report, "Better Off in the Community". Both pointed to the fact that there is a crisis in psychiatric care within the capital.
Psychiatrists across the capital have warned in recent months that the Government's care in the community programme cannot cope with the tide of demand for hospital beds for people with mental illness in London. Studies have shown that, across the capital, the average unit has a bed occupancy rate of between 100 per cent. and 120 per cent. What are psychiatrists to do in a crisis when all the beds in London are full and there are no beds throughout the south of England?
Last September, a survey by the Royal College of Psychiatrists revealed that, during one week, 84 people in London who needed hospital treatment were turned away, while a further 24 were prematurely discharged. The college calculated that an extra 426 beds were needed immediately to deal with the unmet need.
In my area, the bed occupancy rate is 120 per cent. When space runs out, patients are referred to other hospitals—often private hospitals—as extra-contractual referrals, sometimes as far afield as Woking or Oxford. Finding an extra-contractual bed is no easy task. Local psychiatrists have told me that it is not uncommon for calls to be made to up to 35 different hospitals before a place can be found, with patients having to wait 24 to 36 hours to be placed.
In 1990, researchers at Central Middlesex hospital predicted a bed famine if London's mental health beds continued to be closed. I do not dispute what the hon. Member for Croydon, North-East said about the need for change, but it is the pace of change that concerns us. It needs to be balanced change. The rundown and closure of beds and institutions without adequate alternatives being provided is causing the crisis in the capital's health services, and a crisis it is.
In support of the plans to cut beds still further, the Secretary of State relied heavily not only on Tomlinson but on an earlier report by the King's Fund. She appears less keen to accept the King's Fund's subsequent findings in "London—The Key Facts", which was published last April. The document stated that
the capital's health care needs have been underestimated. There are now good reasons for believing that London merits a larger—not smaller—share of the NHS cake".

The Secretary of State also appears unwilling to accept the King's Fund's proposition that purchasing power for hospital and community health services in London
should be increased by approximately £200 million".
Professor Jarman's findings have been mentioned by my hon. Friends, and they were reinforced by a recent update by James Raferty of the Merton, Sutton and Wandsworth health authority and Nigel Edwards of the London Health Economics Consortium. They stated that in 1992–93, the loss of 400 beds would have equalised London's position with the rest of England, but 1,499 beds were lost. They identified particular problems for elderly people, as London has a severe shortage of nursing home and residential care.
Those problems are leading to a crisis, but it will not be solved by cutting more beds. We must provide the resources and facilities elsewhere, and my hon. Friend the Member for Dulwich (Ms Jowell) was absolutely right on that matter. If there is validity in the theory that improvements in primary care will lead to a lessening demand for hospital beds, let us have those improved community GP services up and running before the beds are taken away.
The Parliamentary Office of Science and Technology bears out the view that if we improve primary care—particularly access to primary care for those who are currently denied it—we increase the demand upon hospital beds and specialist provision.
I started by talking about accountability. Despite assurances that primary health care would be prioritised as hospitals close, there are now fewer GPs and health visitors in London than there were three years ago. Londoners have no voice in the current arrangements. The patients charter promises patients a greater say in their own health care, but, with no democratic accountability, Londoners find themselves on the receiving end of chaos and cuts.

Lady Olga Maitland: I am an enthusiastic supporter of the NHS. My children took advantage of the NHS, and my parents also take advantage of the service. I can say unreservedly that my family is entirely satisfied with the treatment that we have received.
I do not see a crisis in the NHS. I see challenges and opportunities in today's world. Modern medicine is making tremendous advances and is giving us untold opportunities to provide the very best patient care. I congratulate my right hon. Friend the Secretary of State on her positive and caring speech. She has given many examples of investment in the health service and in patient care. I do not believe that anybody could have any doubts about her commitment.
This debate has been full of gloom and doom. Opposition Members have run down the health service and have tried to frighten potential patients into believing that they will never get real service and care. The facts provide a totally different picture. More patients are being treated than ever before. Why do not the Opposition give credit for that? The length of time for which patients must wait for treatment has fallen sharply. Why do not the Opposition give credit for that? Health care and health have improved dramatically in the past few years, while life expectancy has risen by two years for men and


women. The perinatal and infant mortality rates have fallen by more than two fifths since 1979. Why do not the Opposition give us credit for the work that we do in the health service?
Why do not the Opposition even mention that for three years in succession our immunisation programme has been so successful that no child in Britain has died of measles? Why do not they tell us that services at doctors' surgeries have improved, that there are now fewer patients on a doctor's lists and that the number of practice nurses has risen from 900 in 1978 to more than 8,500 in 1992? Why do not they give us credit for that?
Why do not the Opposition tell the patients the good news rather than try to terrorise them? Why do not they admit the success of the patients charter? Should not the patient have the right to know the success and the results produced by a hospital? Should not patients have the right, which we have now given them, to be guaranteed a standard of service? I have not heard the Opposition mention once the success of the patients charter this afternoon. Are they simply frightened to admit success when it is happening?
Why do not the Opposition accept that once again the Government have increased spending in real terms both last year and in the forthcoming year? The Opposition talk about a shortage of beds. I put a question to the Opposition, which I am sure will be answered during the replies to the debate. If they are so worried about a shortage of beds, as they allege, I am sure that they will support the Government's NHS reforms, their fight against waste and their battle for efficiency in order to provide more money for the very beds that the Opposition seek.

Mr. Nicholas Brown: I can answer that now. We do not support the Government's reforms, and we do not support their waste either.

Lady Olga Maitland: The Opposition say that they do not support the reforms, but by the same token they try to take away the opportunity to succeed and provide more for the patients.
Perhaps it would be a good idea if I told the House a little more about the successes that my constituents experience. I have in Sutton the St. Helier NHS trust. It is a proven success. It has made achievements that are well worth noting. Let us take waiting times for an operation. Now, 60 per cent. of our patients are treated within six months. The vast majority wait only nine weeks for a non-urgent out-patient appointment. As everyone knows, urgent appointments can be made within days or, indeed, hours if necessary.
Let us consider the success that we have achieved in hip replacements. Now, no patient need wait a day longer than six months. Let us consider gynaecology. No woman need wait longer than six months for treatment. Let us consider treatment for the eyes. No patient need wait even as long as six months. Often patients are treated within four months. Let us consider the success of day surgery. Now, 50 per cent. of non-emergency cases are treated as day cases. That is the result of modern medicine and techniques.
Five years ago, 20 per cent. of cases in the ear, nose and throat department in Sutton were day cases. Today we get through 60 per cent. of cases as day cases and

more people are treated as a result. Let us go back for a moment to the patients charter. Does not the House think that it is marvellous that a patient can now expect to be seen within half an hour of arrival in out-patients? In my St. Helier hospital, 90 per cent. of patients are seen almost immediately.
What about accident and emergency departments, which have been so run down by the Opposition? At my local A and E department, 90 per cent. of the patients who turn up are assessed within five minutes. The nurse makes the initial assessment, reassures the patient and the whole system is put in motion. That is a tremendous advance. There is no longer that sense of fear, not knowing and not getting immediate help. My hospital trust is aware of the pressures at the A and E department and has managed already to allocate resources for a further 25 beds as a result of our efficiency reforms in that department. Curiously, we have the resources for an A and E consultant, but no consultant has come forward for the post. I find that a sad reflection.
Let us consider the success that we have had in children's medicine, which is an important area. Since the children's hospital was moved from the old Queen Mary building into St. Helier's, there is no doubt that children in Sutton have a much better environment in which to be treated. They no longer have to suffer the experience of being moved from one ward, loaded into an ambulance and taken to another building for an operation. Now they will be treated entirely on site. That gives the doctors more time for patient care and enables them to waste less time travelling around.
As a result of the revision of our management of child care, we now have an intensive care bed for children. The children are taken care of by dedicated paediatrically trained nurses. Such successes in Sutton are appreciated by my patients. Why cannot the Opposition bring themselves to admit the successes that can take place within the management of an NHS trust?

Mr. Peter Ainsworth: Is my hon. Friend aware of the similar chronicle of achievement at East Surrey hospital, which is not too far away from St. Helier hospital? Does she agree that the rationalisation of health care within central London frees up resources and that hospitals such as St. Helier and East Surrey on the edge of London stand to be prime beneficiaries?

Lady Olga Maitland: I could not agree more with my hon. Friend. He is right that, when we re-examine the concentration of health services in the centre of London, it is appropriate that we recognise that there has been a depopulation of the centre and movement to outlying areas. Furthermore, patients no longer want to travel into the centre of London when they can receive excellent service and treatment close to home.
Another success in St. Helier hospital is in the provision of diagnostic equipment. We now have the most up-to-date diagnostic equipment that any hospital could wish to have. We have a new magnetic resonance imaging scanner and we are ordering a new computerised tomography scanner. With that combination of diagnostic equipment, the hospital will be in the world class in providing services for patients.
Let us contrast the success of medical care both nationally and in my constituency with the gloom, doom and fear-ridden material that has been fed to us by the Opposition. I find it stunning that the Opposition should


seek to use what I can only call the Chinese water treatment. They believe that if they give people big, bad news often enough, people will believe that it is true. Every time that I am out on the doorsteps in my constituency, I ask people, "How are you getting on? What are your worries? What are your concerns?" They tell me that they are worried about the health service. I ask what experience they have had that upset them. Then they say, "Oh no, I have been well treated. I have an excellent doctor. I had wonderful treatment in the local hospital. The doctors were dedicated. The nurses were kind. I came home and I am now fit and well." I ask why they feel worried. They say, "It is what the politicians say on television."
It would be more appropriate if the Opposition stuck to honesty and the truth and acknowledged success when it happened. Such success is abundant and widespread. It does not help patients if they hear endless scaremongering stories that create a tremendous amount of nervousness and fear.
I shall give the House an example. Hon. Members have only to look at the Opposition motion. In the first line, they refer to a "crisis". There is no crisis in the health service when it is moving along with the punch, the power and the impact of investment and resources. What do they mean by that?
The Opposition also keep talking about failure. There is no failure when more patients are being successfully treated than ever before. It would be more worth while if the Labour party was a little more honest about what its plans would be, should it ever have the opportunity to run the country. Thankfully, the country will never vote for Labour.
I do not believe that the patients, about whom the Opposition say they are so worried, have any idea that Labour plans to put our medical care under political control. The Opposition want to abolish GP fundholding and break down national health trusts, and put them under the local authorities and town hall politicians. As a patient, I would not want my medical future to be controlled by town hall politicians—certainly riot by socialist ones.
Thank heaven a Conservative Government are taking care of the health service and that there is not a hope in hell that the Opposition will ever take over.

Mrs. Bridget Prentice: Tomorrow night we shall be debating Third Reading of the Health Authorities Bill. That Bill offered the Government the opportunity to set up a strategic health authority for London, which would have gone a great way to help to resolve the crisis in London's health care. Such an authority could have monitored health care throughout London, co-ordinated activity and avoided the duplication of services to which the Secretary of State referred. It could have targeted resources and developed a coherent health strategy for the capital, which would have benefited the people of London. The Government lost that golden opportunity because they do not listen, not only to the Opposition, but to the people of London.
It was interesting to hear the hon. Member for Sutton and Cheam (Lady Olga Maitland) say that people did not come to her with health care problems. In the past year, more than 60 people have come to my surgeries to

complain about aspects of London's health service. If that were duplicated throughout every London constituency, it would add up to about 60,000 people with complaints about what is happening to them and to the health service. It might be useful for the Minister, and through him the Secretary of State, to hear a few examples.
A Miss Beirne was admitted to Lewisham hospital in May 1994 for two hip replacement operations and was given a blood transfusion on admission, in preparation for surgery. Her operation was due to take place within a week or two. Six weeks later, she was still in hospital and had not had an operation. She spent more than eight weeks in hospital for an operation that should have taken no more than two. The hospital said that it was a painful decision when the surgeon had to choose on which cases to operate.
Mrs. Jean Anderson, a 78-year-old pensioner, suffered a fall in her home and fractured her leg. She was released into the care of her frail 80-year-old husband. No attempt was made to give her any form of care or back-up such as a home help. Thirteen days passed without any contact from medical services in the form of aftercare or otherwise. Mr. and Mrs. Anderson were left to fend for themselves and, not surprisingly, Mrs. Anderson's health deteriorated dramatically. Her son contacted Lewisham social services, which offered assistance and, finally, visits from a community physiotherapist and a district nurse were arranged, but she collapsed and died at home less than 24 hours later.
In a letter to me from the community health council, the acting chief officer said:
Her chances of surviving would have been increased immeasurably if she had been receiving social, medical, nursing and physiotherapy support.
She received none of those.
I mention that case because the Health Secretary suggested that there was sufficient aftercare and enough beds for elderly patients. The "London Monitor", published by the King's Fund, states that there is a severe shortage of residential beds for the care of elderly people, which is not compensated for by the greater than average number of hospital beds in the capital. London has 5 per cent. more hospital beds for acute and elderly care, but 30 per cent. fewer residential care beds for the elderly. The chief executive of the King's Fund said:
The complexities of the health care system in London require a high degree of co-ordination if change is to be achieved without paying a very high price in human terms.
It is not only patients, or even nurses, who come to my surgeries to talk about the state of the national health service. Two weeks ago, a consultant neurosurgeon sat in the waiting room of my surgery for more than an hour because he wanted to talk to me about the state of the health service in his hospital. It comes to something when a consultant neurosurgeon has to queue up to see his Member of Parliament to explain the sorry state that the health service has reached in London. He said that the internal market was falling considerably short of being a "free market" because of the substantial financial distortions. He told me about the interminable forms that he must fill in whenever he wants to refer a patient. He now employs two secretaries when previously he had none. He told me that competition in health care has resulted in such problems that the free exchange of information has all but disappeared, which is having a negative effect on patients. He also said that the NHS


collects the most user-friendly, rather than the most accurate, statistics. One of his colleagues logged 36 appointments for eight patients. For statistical purposes, that was deemed to be 36 patient episodes and, therefore, 36 patients.
I am a great fan of "Coronation Street" and I try to watch episodes whenever I can. I do not expect, and nor do my constituents in east Lewisham or Londoners, expect to be considered as episodes like a soap opera. It is a contemptible device, by which the Secretary of State can pretend that the health service is treating more people when it is not.
I hope that the Secretary of State will listen to the Opposition, to patients in London, to nurses, to neurosurgeons and to the other staff of London hospitals. If she cannot listen to them, perhaps she will listen to the editorial of the Evening Standard today which says:
Of course there are national problems with the NHS reforms; in London however these are aggravated by dogmatic hostility to the teaching hospitals, chronic underfunding and a profound inability to appreciate the scale of problems unique to a capital city. There is no room for complacency. This is an urgent situation which calls for acknowledgment and amendment from Government.
Let the Secretary of State for Health listen for once, not merely to us, but to the people of London and to London's newspaper, which held such a wonderful conference at the weekend. It explains today exactly why this debate is taking place—because of the crisis in health care in London.

Mr. Jim Dowd: I shall try not to delay the winding-up speeches too long. As the motion makes clear, more than anything else, there is a crisis of confidence in health care in London, especially in south-east London, and I am delighted to follow my good friend, the hon. Member for Lewisham, East (Mrs. Prentice).
I was a member of the area health authority, as it was then, for Lambeth, Lewisham and Southwark in 1976 and went on to be a member of the successor district health authority—it was disbanded in 1990—until I had to leave for having had the temerity to be an elected member representing Lewisham council. When I first joined the area health authority, there were at least 16 hospitals in Lambeth, Lewisham and Southwark. Today, there are four. At that time, there were six hospitals in Lewisham alone—today there is one.
As a member of the district health authority, I was deeply involved in the planning of what became known as Guy's phase 3—Philip Harris house, which has been mentioned. I took great pleasure in imagining that, one day, it would serve the needs of the people of south London and much further beyond in the ways for which it was designed. That will not happen now.
Trusts in south-east London need to be rebuilt. We suffered the first of the flagship authorities in the formation of Guy's and Lewisham. We were told at the time that Lewisham had to amalgamate with Guy's because it could have no independent existence worthy of the name and the matter was a fait accompli. The result of the consultation that took place was overwhelmingly against the creation of that trust, yet no notice was taken of it and the flagship set sail.
The Tomlinson report, which was merely a cover for the fact that, left to themselves, the market reforms would have severely damaged health care in inner London, then suggested that the Lewisham and Guy's trust could be broken and Lewisham could happily find its own way in the world as an independent trust. It said that Guy's needed to erect a new flag of convenience and amalgamate with St. Thomas's. If Lewisham did not have a secure future on its own in 1990, how could it have one in 1993? Either way, somebody was telling the people of south-east London less than the truth. Although the result of a consultation on the Tomlinson report was overwhelmingly against the setting up of a Guy's and St. Thomas's trust, once again that view was tossed to one side.
The consultation on the latest plan closed last Friday. Most people fear that it will lead to the closure of Guy's hospital in all but name and that all its services as a district general hospital will be extinguished. South-east London needs that district general hospital and the expertise and excellence that Guy's has come to represent. I implore the Secretary of State to make this a genuine consultation exercise, to listen to what people say and to consider the alternatives. Nobody says that nothing at Guy's must change, but that part of south-east London needs four district general hospitals to serve the community.
We need only look at the pressure that already exists at the accident and emergency departments of Guy's, King's, Greenwich and Lewisham, made worse by the closure of both Bart's and the Brook. The Brook hospital estimates a 20 per cent. increase in the pressure on the accident and emergency departments in surrounding hospitals and everyone in the area knows that those departments are not coping even now. Earlier speakers mentioned the fact that people are kept waiting on trolleys. A constituent wrote to me about her father, for whom even a trolley could not be found, who had to sit in a wheelchair for six hours at Lewisham hospital. It is foolish to believe that that position will do anything but deteriorate sharply if we lose the services at Guy's.
To understand that, one need only see the response of clinicians at Guy's about the safety of medical procedures if the A and E and intensive care departments are curtailed. I remember speaking to Peter Griffiths, who was general manager of the district health authority in 1986. He went on to be chief executive of Lewisham and Guy's and was famed for being the man who could drive two cars at once, because that is what he got for the job. He then joined the national health service executive. In 1986, he said that there would be a Government clear-out of hospitals in central London, and his job was to ensure that, whatever else happened, Guy's was not one of them. Sadly, he has failed, but the thrust of what he foresaw was patently clear. We need to save the services at Guy's, not just for the people of south-east London but for its reputation as a research centre, which will be seriously undermined if the watered-down scheme being advanced is proceeded with.
My final point is about the acute trusts and relates to what my hon. Friend the Member for Woolwich (Mr. Austin-Walker) said about accountability. I do not have the same problem with the mental health or primary care trusts, but getting responses to inquiries on behalf of constituents from any of the acute trusts is almost impossible. They respond only after they have been badgered time and again. I have occasionally been forced


to table questions asking the Secretary of State to tell them to reply. They do not reply because they know that they are accountable to no one for what they do and think that they can reply, or not, as they see fit.
I shall have to ask the Secretary of State to press the acute service to respond to a letter about a case with which I am dealing. I have had replies, but only once they have been pressed into replying, from the patient liaison manager; the operational and nursing director; the service manager, anaesthetics and intensive care unit service; and the chief executive, all of whom say that they will provide more information at a later date. That shows the insularity that they enjoy in their privileged positions, where they are cut off from the public whom they serve.
Others have said how the London ambulance service is scandalously failing to provide a proper service for the people of London, exacerbating people's problems when they eventually arrive at accident and emergency departments.
Despite Government figures, people know that London's health services are being damaged. That is not because we are spreading bad news to them; on the contrary, they come to us with complaints of what is happening to them and to their families and loved ones. It is patently clear that that is damaging the Government. On Saturday, I received a letter from a woman who said that it took 10 hours for her son to have an emergency operation at Lewisham hospital. She said:
I am afraid I never voted for you at the last election, but as my MP I would like you to take up a matter with Lewisham Hospital.
She went on to say:
I do not blame the doctors or nurses, but I do blame the bloated management and contractors for the poor state of cleanliness in the hospital—I will never again vote Conservative!
That is what the experience of the NHS is doing to Government supporters.
The people of London need and deserve better from their health service. Once this Government are out of the way, they will get better.

Mr. Nicholas Brown: "I will never again vote Conservative" may be the most telling point to be made in this debate, and it has been endorsed by hon. Members from both sides of the House. Apart from the Secretary of State, only one hon. Member has spoken passionately and wholeheartedly in favour of the Government's current stewardship of health care in London. Every other speaker, with differing degrees of emphasis, has referred to his or her fears and concerns and, in the case of Opposition Members, expressed the belief that London's health care is in crisis.
There is a financial crisis and a crisis in secondary care and in accident and emergency services. The promised shift to primary care simply is not happening. There is continuing underdevelopment of community health services, community care and services for the mentally ill. As my hon. Friend the Member for Woolwich (Mr. Austin-Walker) rightly said, the London ambulance service remains a cause for concern, three years after the Secretary of State first said that she would make it her personal priority. My hon. Friend the Member for Lewisham, East (Mrs. Prentice) rightly pointed out—the theme has been echoed by other hon. Members in the

debate—that there is neither an overview of services in London nor a recognition of the special and important features that affect health care in the capital.
Condemning the Government's stewardship of the capital's health care services is no reflection on the hard-working public servants in the health service, from consultants to those who clean the hospitals. We do not condemn the work, heart and energy that they put into providing health care in the capital. If they had the Government's support and the necessary resources, they could do a first-rate job, but they have neither the Government's support nor the resources.
I understand that Mr. Roy Lilley has just appeared on the early evening media speaking for the Conservative party about the nurses' pay rise and said:
The money is there for the nurses local pay rise; but not for just turning up"—
which cannot be compared with Tory Members Parliament. That is not a fair way to deal with nursing staff, whose dedication is much admired on both sides of the House. I understand that the Secretary of State is hinting this evening that she is considering abolishing the pay review body if the nurses do not agree to a 1 per cent. national rise. If the Secretary of State is hinting at that, it is a complete disgrace. If she is not, although time is short, I will happily give way to her now to put all our minds at rest. Frankly, I will happily give way to anyone who can put our minds at rest, but I see that nobody is rising to do so.
I return to the theme of today's debate: the health care crisis in London. At the bottom of the crisis is funding. The allocation of funds to the capital's health authorities, as my hon. Friends have pointed out, has recently been recalculated. The new Government formula appears to benefit outer London at the expense of the inner-city areas. I wonder why. One does not have to think very hard about it. It is quite instructive to place a map of Conservative-held constituencies over one showing the just-losers in the redistribution formula compared with the heavy losers. I have no doubt that it is politically driven and that people who live in the inner cities will lose out. London's 16 health authorities stand to lose £111 million from their budgets over the next five years. That is a cut. As has been pointed out, the biggest losers are in the inner-city areas, with Camden and Islington the hardest hit with a loss of some 14.6 per cent. in purchasing power.
Spending on health care in London as a proportion of total NHS spending has fallen from 20 per cent. in 1988–89 to some 15 per cent. in 1995–96. London has about 15 per cent. of the population, so the Government will no doubt argue that the figures are commensurate, but that is not so, as I hope to show in a moment. The Conservatives do not make the same argument when talking about spending on London's police force. Although the population is the same, spending is 29 per cent. of the national total. Average health authority spending per head for 1994–95 shows London lagging behind Liverpool, Newcastle, Manchester—the other major metropolitan centres. There is also a shortfall in the spending per head on the family health services authorities.
London is a special case, not just because it is the nation's capital, but because it has the nation's largest concentration of inner-city deprivation. Half the entire United Kingdom population of drug abusers is in London. London has 60 per cent. of the homeless population and 75 per cent. of all known AIDS cases. The unemployment


rate in inner London is double the English rate. Inner London has three times the English proportion of poor housing and overcrowding. Some 25 per cent. of London's school children qualify for free school meals. Although Conservative Members try to resist the argument, there is a direct link between poverty and health. London boroughs account for seven of the 10 most deprived districts in the UK, as measured by the "Breadline Britain in the 1990s" survey. London boroughs account for 11 out of the 12 of the most deprived districts in the UK, using the Townsend deprivation index.
That has an impact on health. Inner London mortality rates are 25 per cent. above the English average. So London is a special case. The Government's claim to be redistributing resources from secondary to primary care is just not borne out by the facts. They are cutting the budget. The Labour party is calling for a moratorium, a chance to examine again the conclusions of the Tomlinson report. I know that the Minister of State will argue that it is a call for a review of a review, that it is, therefore, time wasting and that we should get on. That is what we are calling for. It is important. If the nation is marching in the wrong direction, it would be better to stop and think again rather than continue marching in that direction, which is the case that the Minister is about to advance on us.
It is our view that the Tomlinson report is flawed. In fairness to Tomlinson, however, he was not asked to examine provision for health care in the whole of London—he should have been—and his report deals only with inner London, and mainly with acute beds. He concluded that London is over-bedded. On that he is wrong. The most realistic figure that I can get—it is substantiated by the House of Commons Library—is that London has 2.5 acute beds per 1,000 of the population. I know that when the Minister responds he will quote a figure of more than four beds per 1,000 of the population, but to get that figure he is including every bed he can possibly find—no doubt including those in the private houses of Conservative Members. It is an exaggeration.
The other argument that Tomlinson addressed is that London has 15 per cent. of the population but 20 per cent. of the expenditure. When one excludes the London allowance and the extra costs involved in the teaching functions of secondary care in London, the comparison is 15 per cent. of the population and 15 per cent. of the resources. There are other reasons why the Tomlinson report is flawed, but time prohibits me from going through them.
In summary, however, the report tries to treat inner London like an "average" English district, which of course it is not. It tries to suggest that increased primary care means fewer hospital patients whereas it may well not. One might well stimulate demand for secondary services by providing primary services. Tomlinson believed that patients from outer London did not use inner London hospitals. That, too, is wrong. Research by the King's Fund has shown that, of half a million in-patients treated in inner London, 150,000 came from outer London or other parts of the country. Tomlinson's calculations also failed to distinguish between the different types of beds—surgical and medical. The crisis is not just one of secondary care, but primary care as well. If the present rate of closure of London's psychiatric beds continues,

there will be none left by the year 2000. That cannot be the Government's objective, or the Secretary of State would never be out of the courts.
My hon. Friend the Member for Woolwich (Mr. Austin-Walker) referred to the London ambulance service. Some 37.8 per cent. of ambulances failed to arrive within the patients charter standard time of 14 minutes in London. What on earth is the point of having a charter if the service that is supposed to be supervised by it cannot live up to the results? The London ambulance service is long overdue for a thorough management review, as promised by the Secretary of State three years ago. She told me that it was to become a trust. The trust institutions are the Government's remedy for the problems in the NHS. If that is their preferred remedy, why has it taken so long for it to be put in place in the London ambulance service, where the problems are the most acute?

Mr. Spearing: My hon. Friend noticed earlier that the Secretary of State will not say—I do not know whether the Minister will—whether she will reply factually to the matters that I raised in my two memorandums. Surely the answer is there somewhere, and with the Select Committee on Health examining the matter in its inquiry, which both Ministers have pre-empted.

Mr. Brown: I am convinced that becoming a trust will not solve the problems of the London ambulance service, which seem to be management and technology driven rather than anything to do with the trust structure. If everything is all right in the London health service, why are waiting lists in London the longest in the country? When the Evening Standard sponsors a conference in association with the Association of London Authorities and the NHS Support Federation, why does it talk about the loss of beds, about there being fewer beds than in any other inner-city area, about the increase in waiting lists—just about everything except giving the Conservative party a ringing endorsement? It concluded by passing a resolution, part of which said:
We call for an urgent independent inquiry, open to the public, to secure London's threatened health services, teaching and research.
That is not an endorsement of the Secretary of State's stewardship, but rather a plea to vote for the motion that the Labour party has tabled today.

The Minister for Health (Mr. Gerald Malone): I am grateful to the hon. Member for Newcastle upon Tyne, East (Mr. Brown) for leaving me some time in which to wind up an extremely important debate.
The hon. Gentleman mentioned nurses' pay. I assure him that the Government do not wish to give any impression that they are thinking of abandoning the review body mechanism—an important mechanism set up some 14 years ago, all of whose report recommendations have been honoured. As the hon. Gentleman raised the point, let me also emphasise that there is money in the system to finance its recommendations. I hope that we shall be able to make progress in that regard.
I said this morning—when I was engaged in some broadcasting with the hon. Gentleman—that Labour's policy was a review of a review, and that is exactly what it is: "Let's mark time, let's do nothing." I hoped that this afternoon we might hear some intellectual underpinning for that policy. We heard a number of the constituency


points that Opposition Members would be expected to raise in an Adjournment debate, but we were not shown a broad picture of what Labour intends to do about London's health care problems.
We heard no suggestions from Labour Members to deal with the over-provision of specialties and the future of medical education in London. We were not told whether they endorsed the movements that were taking place in the context of our policies; they said nothing about the way in which they would tackle the challenges posed by new technology to the provision of acute care in the city, and how rationalisation could take place in the light of such developments.
I expected the debate to give the right hon. Member for Derby, South (Mrs. Beckett) an opportunity to address these matters anew. After all, she comes relatively fresh to her portfolio, and—as Conservative Members know—she comes to it refreshed by a vigorous campaign for the Labour party leadership. She should be in full flow, exhibiting the drive that she exhibited during that campaign in her examination of the policies. I wondered whether, between that time and now, the right hon. Lady would screw up her courage sufficiently to secure a positive policy from her party. She tells us that she and her hon. Friends have looked at the matter in the round, consulted widely and called for a moratorium. I do not think that that suggests that a great deal of thought lies behind what they are saying.

Mr. Nicholas Brown: Will the Minister give way?

Mr. Malone: If the hon. Gentleman will excuse me, I shall move on.
I was about to say that it was interesting to note the contrast between what the right hon. Lady said and what was said by the hon. Member for Southwark and Bermondsey (Mr. Hughes), who at least conceded that movement was needed on all these fronts and that it would be wrong to arrange a moratorium and yet another review. When asked this morning about the time scale of the review, the hon. Member for Newcastle upon Tyne, East said that the review and moratorium would both take place when Labour was in government, "in perhaps two years' time": I dispute that. In any event, organising the review and moratorium would doubtless take some time. Even if Labour achieved office, it would be committed to a "do nothing" policy for London until the end of the century. It would simply fiddle while London's health stagnated.

Mr. Nicholas Brown: The Minister is having fun with what he parodies as our policy, but he is not telling us much about his own. We are merely asking the Government to stop and think. They are going in the wrong direction. We are saying, "Do not carry on—stop and think."

Mr. Malone: What London's health care needs is for a Government to act on the basis of information before them, and a positive agenda of bringing about change. I shall say more about that shortly.
The right hon. Member for Derby, South had a choice when she embarked on her present responsibilities. She could have played a constructive part in the on-going debate about what should happen to London's health care, or she could have adopted the more fashionable course and joined the "London luvvies" campaign. They attend every demonstration; they come fresh to the scene, and

then depart pretty quickly. I am sorry to say that the right hon. Lady seems to have jumped on to the fashionable demonstration bandwagon, rather than contributing to a constructive debate.
Much has been made about whether there has been a real transfer of recourse to primary care. The answer is that there has been, particularly through the London implementation zone initiatives: they involve numerous projects that have improved health care substantially in hon. Members' constituencies. I have seen quite a few of those improvements. I visited the constituency of my hon. Friend the Member for Croydon, North-East (Mr. Congdon), and observed the results of the donation of £30,000 to a mobile unit in the area. That and the provision of £118,000 for community dental services in Hackney are just two examples of many that are being supported by the London implementation zone initiatives—together with the £170 million in capital expenditure on primary care that is taking place over six years.
Earlier this week, I was pleased to be able to announce a £10 million education programme for primary care in London. Such initiatives will continue as primary care improves—and it is vital that that improvement takes place.
During the debate, we heard a number of suggestions about when the need for a change in London's health care originated. In fact, it happened rather longer ago than any hon. Member suggested. I can provide a quotation that underlines what is being done for London's health care extremely well:
Never think that you have done anything for the sick of London until you have nursed them in their own home".
That is precisely the context in which we are moving care from the acute sector into the community, closer to people; but the quotation is not from Tomlinson or Acheson, but from Florence Nightingale in about 1880. She understood exactly what was wrong with centralised services that were not serving the community properly.
When the health care debate was well under way, the King's Fund said:
The status quo is not an option, because Londoners need a first class 21st century health service system, rather than a decaying 19th century one.
The question is whether change can be managed, and whether transition can be given an impetus by Government. That is what is happening now, enabling the configuration of health services in London to meet the needs of Londoners.
However, the debate is also important to those who live outside London. It cannot be right for a single part of the country—no matter how much it may say that it deserves resources—to take up an unfair allocation. There has been considerable discussion of hospital beds today. The hon. Member for Newcastle upon Tyne, East is right: I shall cite the figure that he expected me to cite. In 1993–94, inner London had 4.2 available acute hospital beds for every 1,000 people; the national average was 2.3. That illustrates that a large management problem is involved in the spreading of resources around London's acute hospitals, and that it is time that it was rationalised.
London now has 43 major acute hospitals, each of which has more than 250 beds. It has far more than any comparable city. It also has far more specialist services, which consume a tremendous amount of revenue and capital resource. They are spread around the city, and


need reconfiguration. That is why rationalisation is required—and not in the impossible never-never time scale set out by the Labour party.
As for overall expenditure and commitment to the people of London, district health authority expenditure per capita in inner London is approximately 50 per cent. above the national average. Family health service authority expenditure, however, is approximately 5 per cent. below the national average. That demonstrates the need to ensure that the resource is transferred, over a reasonable timescale.
Time will not permit me to answer a number of constituency points raised by hon. Members on both sides of the House. I shall read the Official Report and if any of the points require an answer, I shall supply one.
Opposition Members suggested that there was no funding for this transitional period. There is continual funding, both for the acute sector and for primary care. I mentioned the London implementation zone initiatives. In addition to that, £65 million of transitional funding is available for the acute sector. I completely deny any suggestion that what is happening is not being properly funded.
The right hon. Member for Derby, South made what she thought was a rather amusing remark about hooligans on the terraces. We are the players on the pitch and the right hon. Lady is the hooligan on the terrace shouting to cause delay. The Opposition are hooligans with the oddest possible slogan. Hooligans usually shout, "Oh, ah, Cantona!" The right hon. Lady has a new one—"Oh, um, moratorium!"—but it will not wash.

Question put, That the original words stand part of the Question:

The House divided: Ayes 229, Noes 282.

Division No. 77]
[7.00 pm


AYES


Abbott, Ms Diane
Campbell, Mrs Anne (C'bridge)


Adams, Mrs Irene
Campbell, Ronnie (Blyth V)


Ainger, Nick
Campbell-Savours, D N


Ainsworth, Robert (Cov'try NE)
Caravan, Dennis


Alton, David
Cann, Jamie


Armstrong, Hilary
Chisholm, Malcolm


Austin-Walker, John
Church, Judith


Banks, Tony (Newham NW)
Clapham, Michael


Barnes, Harry
Clarke, Eric (Midlothian)


Barron, Kevin
Clarke, Tom (Monklands W)


Battle, John
Clelland, David


Beckett, Rt Hon Margaret
Clwyd, Mrs Ann


Beith, Rt Hon A J
Coffey, Ann


Bell, Stuart
Connarty, Michael


Benn, Rt Hon Tony
Cook, Robin (Livingston)


Bennett, Andrew F
Corbett, Robin


Benton, Joe
Corbyn, Jeremy


Bermingham, Gerald
Cousins, Jim


Berry, Roger
Cox, Tom


Betts, Clive
Cunliffe, Lawrence


Boateng, Paul
Cunningham, Jim (Covy SE)


Boyes, Roland
Cunningham, Rt Hon Dr John


Bradley, Keith
Dalyell, Tam


Bray, Dr Jeremy
Darling, Alistair


Brown, N (N'c'tle upon Tyne E)
Davidson, Ian


Burden, Richard
Davies, Bryan (Oldham C'tral)


Byers, Stephen
Davies, Ron (Caerphilly)


Caborn, Richard
Davis, Terry (B'ham, H'dge H'l)


Callaghan, Jim
Dewar, Donald





Dixon, Don
McWilliam, John


Dobson, Frank
Madden, Max


Dononoe, Brian H
Maddock, Diana


Dowd, Jim
Mahon, Alice


Dunnachie, Jimmy
Marek, Dr John


Eagle, Ms Angela
Marshall, David (Shettleston)


Eastham, Ken
Marshall, Jim (Leicester, S)


Enright, Derek
Martin, Michael J (Springburn)


Etherington, Bill
Martlew, Eric


Fatchett Derek
Meacher, Michael


Field, Frank (Birkenhead)
Meale, Alan


Flynn, Paul
Michael, Alun


Foster, Rt Hon Derek
Michie, Bill (Sheffield Heeley)


Foster, Don (Bath)
Michie, Mrs Ray (Argyll &amp; Bute)


Fraser, John
Milburn, Alan


Fyfe, Maria
Miller, Andrew


Gerrard, Neil
Mitchell, Austin (Gt Grimsby)


Godman, Dr Norman A
Moonie, Dr Lewis


Godsiff, Roger
Morgan, Rhodri


Golding, Mrs Llin
Morley, Elliot


Gordon, Mildred
Morris, Rt Hon Alfred (Wy'nshawe)


Graham, Thomas
Morris, Rt Hon John (Aberavon)


Grant, Bernie (Tottenham)
Mowlam, Marjorie


Griffiths, Nigel (Edinburgh S)
Mullin, Chris


Griffiths, Win (Bridgend)
Murphy, Paul


Gunnell, John
Oakes, Rt Hon Gordon


Hain, Peter
O'Brien, Mike (N W'kshire)


Hall, Mike
O'Brien, William (Normanton)


Hanson, David
O'Hara, Edward


Harman, Ms Harriet
Olner, Bill


Henderson, Doug
O'Neill, Martin


Heppell, John
Orme, Rt Hon Stanley


Hill, Keith (Streatham)
Parry, Robert


Hinchliffe, David
Patchett, Terry


Hodge, Margaret
Pearson, Ian


Hoey, Kate
Pendry, Tom


Hogg, Norman (Cumbernauld)
Pickthall, Colin


Home Robertson, John
Pike, Peter L


Hood, Jimmy
Powell, Ray (Ogmore)


Hoyle, Doug
Prentice, Bridget (Lew'm E)


Hughes, Kevin (Doncaster N)
Prentice, Gordon (Pendle)


Hughes, Robert (Aberdeen N)
Prescott, Rt Hon John


Hughes, Roy (Newport E)
Primarolo, Dawn


Hughes, Simon (Southwark)
Purchase, Ken


Hutton, John
Quin, Ms Joyce


Illsley, Eric
Radice, Giles


Jackson, Glenda (H'stead)
Randall, Stuart


Jackson, Helen (Shef'ld, H)
Raynsford, Nick


Jamieson, David
Redmond, Martin


Janner, Greville
Reid, Dr John


Johnston, Sir Russell
Robertson, George (Hamilton)


Jones, Barry (Alyn and D'side)
Robinson, Geoffrey (Co'try NW)


Jones, Lynne (B'ham S O)
Roche, Mrs Barbara


Jones, Martyn (Clwyd South West)
Rogers, Allan


Jowell, Tessa
Rooker, Jeff


Kaufman, Rt Hon Gerald
Rooney, Terry


Kennedy, Jane (Lpool Brdgn)
Ross, Ernie (Dundee W)


Khabra, Piara S
Rowlands, Ted


Lewis, Terry
Ruddock, Joan


Liddell, Mrs Helen
Sedgemore, Brian


Litherland, Robert
Sheerman, Barry


Livingstone, Ken
Shore, Rt Hon Peter


Lloyd, Tony (Stretford)
Short, Clare


Llwyd, Elfyn
Simpson, Alan


Lynne, Ms Liz
Skinner, Dennis


McAllion, John
Smith, Andrew (Oxford E)


McAvoy, Thomas
Smith, Llew (Blaenau Gwent)


McCartney, Ian
Snape, Peter


Macdonald, Calum
Soley, Clive


McFall, John
Spearing, Nigel


McKelvey, William
Spellar, John


Mackinlay, Andrew
Steinberg, Gerry


Maclennan, Robert
Stevenson, George


McMaster, Gordon
Stott Roger


McNamara, Kevin
Strang, Dr. Gavin


MacShane, Denis
Straw, Jack






Sutcliffe, Gerry
Watson, Mike


Taylor, Mrs Ann (Dewsbury)
Wicks, Malcolm


Taylor, Matthew (Truro)
Williams, Rt Hon Alan (Sw'n W)


Timms, Stephen
Williams, Alan W (Carmarthen)


Tipping, Paddy
Wilson, Brian


Turner Dennis
Worthington, Tony



Wray, Jimmy


Vaz, Keith
Wright, Dr Tony


Walker, Rt Hon Sir Harold



Walley, Joan
Tellers for the Ayes:


Wardell, Gareth (Gower)
Ms Estelle Morris and Mr. John Cummings.


Wareing, Robert N





NOES


Ainsworth, Peter (East Surrey)
Curry, David (Skipton &amp; Ripon)


Aitken, Rt Hon Jonathan
Davies, Quentin (Stamford)


Alexander, Richard
Day, Stephen


Alison, Rt Hon Michael (Selby)
Deva, Nirj Joseph


Allason, Rupert (Torbay)
Devlin, Tim


Amess, David
Dicks, Terry


Ancram, Michael
Douglas-Hamilton, Lord James


Arbuthnot, James
Dover, Den


Arnold, Jacques (Gravesham)
Duncan, Alan


Arnold, Sir Thomas (Hazel Grv)
Duncan Smith, Iain


Ashby, David
Dunn, Bob


Atkins, Robert
Durant, Sir Anthony


Atkinson, David (Bour'mouth E)
Dykes, Hugh


Atkinson, Peter (Hexham)
Eggar, Rt Hon Tim


Baker, Nicholas (North Dorset)
Elletson, Harold


Baldry, Tony
Emery, Rt Hon Sir Peter


Banks, Matthew (Southport)
Evans, David (Welwyn Hatfield)


Bates, Michael
Evans, Jonathan (Brecon)


Batiste, Spencer
Evans, Roger (Monmouth)


Bellingham, Henry
Evennett, David


Bendall, Vivian
Faber, David


Beresford, Sir Paul
Fabricant, Michael


Biffen, Rt Hon John
Field, Barry (Isle of Wight)


Body, Sir Richard
Fishburn, Dudley


Bonsor, Sir Nicholas
Forman, Nigel


Booth, Hartley
Forsyth, Rt Hon Michael (Stirling)


Boswell, Tim
Fowler, Rt Hon Sir Norman


Bottomley, Peter (Eltham)
Fox, Dr Liam (Woodspring)


Bottomley, Rt Hon Virginia
Fox, Sir Marcus (Shipley)


Bowden, Sir Andrew
Freeman, Rt Hon Roger


Bowis, John
French, Douglas


Boyson, Rt Hon Sir Rhodes
Fry, Sir Peter


Brandreth, Gyles
Gale, Roger


Brazier, Julian
Gallie, Phil


Bright, Sir Graham
Gardiner, Sir George


Brooke, Rt Hon Peter
Garnier, Edward


Brown, M (Brigg &amp; Cl'thorpes)
Gill, Christopher


Browning, Mrs Angela
Goodlad, Rt Hon Alastair


Bruce, Ian (Dorset)
Goodson-Wickes, Dr Charles


Budgen, Nicholas
Gorman, Mrs Teresa


Burns, Simon
Gorst, Sir John


Burt, Alistair
Grant, Sir A (SW Cambs)


Butler, Peter
Greenway, Harry (Ealing N)


Butterfill, John
Greenway, John (Ryedale)


Carlisle, John (Luton North)
Griffiths, Peter (Portsmouth, N)


Carlisle, Sir Kenneth (Lincoln)
Grylls, Sir Michael


Carrington, Matthew
Gummer, Rt Hon John Selwyn


Cash, William
Hague, William


Channon, Rt Hon Paul
Hamilton, Rt Hon Sir Archibald


Clappison, James
Hampson, Dr Keith


Clark, Dr Michael (Rochford)
Hanley, Rt Hon Jeremy


Clifton-Brown, Geoffrey
Hannam, Sir John


Colvin, Michael
Harris, David


Congdon, David
Haselhurst, Alan


Conway, Derek
Hawkins, Nick


Coombs, Anthony (Wyre For'st)
Hawksley, Warren


Coombs, Simon (Swindon)
Hayes, Jerry


Cope, Rt Hon Sir John
Heald, Oliver


Cormack, Sir Patrick
Heathcoat-Amory, David


Couchman, James
Hendry, Charles


Cran, James
Heseltine, Rt Hon Michael


Currie, Mrs Edwina (S D'by'ire)
Hicks, Robert





Higgins, Rt Hon Sir Terence
Page, Richard


Hill, James (Southampton Test)
Paice, James


Hogg, Rt Hon Douglas (G'tham)
Patnick, Sir Irvine


Horam, John
Patten, Rt Hon John


Hordern, Rt Hon Sir Peter
Pawsey, James


Howard, Rt Hon Michael
Peacock, Mrs Elizabeth


Howarth, Alan (Strat'rd-on-A)
Pickles, Eric


Howell, Rt Hon David (G'dford)
Porter, Barry (Wirral S)


Howell, Sir Ralph (N Norfolk)
Porter, David (Waveney)


Hughes, Robert G (Harrow W)
Portillo, Rt Hon Michael


Hunt, Rt Hon David (Wirral W)
Powell, William (Corby)


Hunt, Sir John (Ravensbourne)
Redwood, Rt Hon John


Hunter, Andrew
Renton, Rt Hon Tim


Hurd, Rt Hon Douglas
Richards, Rod


Jack, Michael
Riddick, Graham


Jenkin, Bernard
Rifkind, Rt Hon Malcolm


Jessel, Toby
Robathan, Andrew


Jones, Gwilym (Cardiff N)
Robertson, Raymond (Ab'd'n S)


Jones, Robert B (W Hertfdshr)
Robinson, Mark (Somerton)


Kellett-Bowman, Dame Elaine
Roe, Mrs Marion (Broxbourne)


Key, Robert
Rowe, Andrew (Mid Kent)



Rumbold, Rt Hon Dame Angela


King, Rt Hon Tom
Ryder, Rt Hon Richard


Kirkhope, Timothy
Sackville, Tom


Knapman, Roger
Sainsbury, Rt Hon Sir Timothy


Knight, Mrs Angela (Erewash)
Scott, Rt Hon Sir Nicholas


Knight, Dame Jill (Bir'm E'st'n)
Shaw, David (Dover)


Knox, Sir David
Shaw, Sir Giles (Pudsey)


Kynoch, George (Kincardine)
Shephard, Rt Hon Gillian


Lait, Mrs Jacqui
Shepherd, Colin (Hereford)


Lang, Rt Hon Ian
Shepherd, Richard (Aldridge)


Lawrence, Sir Ivan
Shersby, Michael


Legg, Barry
Sims, Roger


Leigh, Edward
Skeet, Sir Trevor


Lennox-Boyd, Sir Mark
Smith, Tim (Beaconsfield)


Lidington, David
Soames, Nicholas


Lilley, Rt Hon Peter
Speed, Sir Keith


Lloyd, Rt Hon Sir Peter (Fareham)
Spicer, Sir James (W Dorset)


Lord, Michael
Spicer, Michael (S Worcs)


Lyell, Rt Hon Sir Nicholas
Spink, Dr Robert


MacGregor, Rt Hon John
Spring, Richard


MacKay, Andrew
Sproat, Iain


Maclean, David
Squire, Robin (Hornchurch)


McNair-Wilson, Sir Patrick
Stanley, Rt Hon Sir John


Madel, Sir David
Steen, Anthony


Maitland, Lady Olga
Stern, Michael


Malone, Gerald
Stewart, Allan


Mans, Keith
Streeter, Gary


Marland, Paul
Sumberg, David


Marshall, John (Hendon S)
Sweeney, Walter


Marshall, Sir Michael (Arundel)
Sykes, John


Martin, David (Portsmouth S)
Tapsell, Sir Peter


Mates, Michael
Taylor, John M (Solihull)


Mawhinney, Rt Hon Dr Brian
Taylor, Sir Teddy (Southend, E)



Temple-Morris, Peter


Mayhew, Rt Hon Sir Patrick
Thomason, Roy


Mellor, Rt Hon David
Thompson, Patrick (Norwich N)


Merchant Piers
Thornton, Sir Malcolm


Mills, Iain
Thurnham, Peter


Mitchell, Andrew (Gedling)
Townend, John (Bridlington)


Mitchell, Sir David (NW Hants)
Townsend, Cyril D (Bexl'yh'th)


Moate, Sir Roger
Tracey, Richard


Monro, Sir Hector
Tredinnick, David


Montgomery, Sir Fergus
Trend, Michael


Nelson, Anthony
Twinn, Dr Ian


Neubert, Sir Michael
Vaughan, Sir Gerard


Newton, Rt Hon Tony
Walden, George


Nicholls, Patrick
Walker, Bill (N Tayside)


Nicholson, David (Taunton)
Waller, Gary


Nicholson, Emma (Devon West)
Ward, John


Norris, Steve
Wardle, Charles (Bexhill)


Onslow, Rt Hon Sir Cranley
Waterson, Nigel


Oppenheim, Phillip
Watts, John


Ottaway, Richard
Wells, Bowen






Whitney, Ray
Wolfson, Mark


Widdecombe, Ann
Wood, Timothy


Wiggin, Sir Jerry
Yeo, Tim


Wilkinson, John
Young, Rt Hon Sir George


Willetts, David



Wilshire, David
Tellers for the Noes:


Winterton, Mrs Arm (Congleton)
Mr. David Lightbrown and Mr. Sydney Chapman.


Winterton, Nicholas (Macc'f'ld)

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments) and agreed to.

Question accordingly agreed to.

MADAM DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved,
That this House recognises that, because of medical advance, shifts in the population and the changing needs of patients, reform of the health service in London is both necessary and long overdue; congratulates Her Majesty's Government for its resolve in addressing the modern needs of people in the capital and the South East, in sharp contrast to the vacillation and evasion of the Opposition; and believes that policies now being pursued have already delivered a better health service for the area, enhancing the excellence of research, teaching and treatment as well as improving local health services in the parts of greatest need.

Regional Electricity Companies

Madam Deputy Speaker (Dame Janet Fookes): I have to announce to the House that Madam Speaker has selected the amendment in the name of the Prime Minister.

Dr. John Cunningham: I beg to move,
That this House deplores the President of the Board of Trade's decision not to refer the hostile bid by Trafalgar House for Northern Electric to the Monopolies and Mergers Commission, given its unpopularity with the majority of Northern Electric's shareholders present at the special general meeting of 15th February, the absence of any experience on the bidders' part in running a private domestic monopoly energy utility, the concerns of the Director-General of Electricity Supply about his ability to regulate a regional electricity company which becomes subsumed within a larger group, the ongoing inquiries being made by the Securities and Futures Authority into insider dealings involving the bidders' advisers the Swiss Bank Corporation, and the expiry on 31st March 1995 of the golden share held by the Government in the 12 regional electricity companies, which will leave them open to predatory or hostile bids without any established procedures for transfer of ownership or the protection of small shareholders, consumers and employees.
It is appropriate and timely that the House should have the opportunity to debate the future ownership, control and regulation of regional electricity companies. The motion reflects the widespread public anger—indeed, contempt—felt by consumers and employees alike for a Government and their energy privatisation policies that have left them wide open to exploitation.
Those views are strongly held across the United Kingdom. They are reinforced week in, week out by further news of massive pay rises, huge no-risk share options and self-enrichment by directors who award themselves grotesque increases which bear no relationship to their own or their companies' performance. It is an abuse of their stewardship that we, the public, the press, consumer watchdogs and successful directors in the private sector condemn, but which the President of the Board of Trade condones, defends and, apparently, even believes in.
People are rightly outraged by the frequent widespread abuse of private monopoly power, which Ministers take no action to prevent. Consumers increasingly despair of a regulator who is powerless to act in their interests, who cannot prevent abuses and who has no remit to consider the employees' situation in regional electricity companies.
Everyone recognises that electricity privatisation created private monopoly power, captive consumers and weak regulation in cash-rich industries, all of which have been a recipe for exploitation. As one City analyst said last week:
Regional electricity companies are quite unlike anything else. As monopolies governed by a kind of regulator they are a licence to print money.
That is what experience has confirmed. Everyone believes that with the apparent exception of Ministers in the Department of Trade and Industry. As the Under-Secretary claimed again last Wednesday, when referring to regional electricity companies,
they are indeed normal companies, operating in the private sector."—[Official Report, 15 February 1995; Vol. 254, c. 1002.]
It appears that Ministers are unique in their isolation in holding to that belief. The City does not believe that; the press does not believe it; consumers do not believe it;


even the chairman and directors of the regional electricity companies themselves do not believe it. They know that if what the Minister said was true and if market discipline genuinely prevailed, they would not be able to get away with the hugh share options and salary increases through which they have been ripping-off consumers. It is a scandal.
Outstanding share options for directors and chief executives in regional electricity companies add up to more than £103 million. The 14 million share options total £103.4 million, according to figures provided by the House of Commons Library. That is the nature and scale of the rip-off that those people are awarding themselves at the consumers' expense. Far from any protection for consumers, the great and false claim at the time of privatisation that regulation would protect them has failed to have any effect. The price controls imposed last summer were so lax that shares in regional electricity companies rose immediately afterwards. The City was pleased that the new regime allowed the money machines to continue.

Sir Michael Grylls: It was probably a slip of the tongue, but the right hon. Gentleman said that share options were ripping off the consumer—I think that those were his words. I am sure that he did not mean that because, as he knows—or should know—share options are not paid by the companies; they come from shareholders. Any share option does not cost the company one single penny. If the right hon. Gentleman thinks about it, he will realise that that is true.

Dr. Cunningham: We all know where the shareholders' money is coming from—straight out of company dividends. Shareholders and directors are the main beneficiaries of what has been going on, at the expense of consumers, employees and the taxpayer. Following last year's new decisions, shareholders once again won at the expense of consumers and employees.
It is against that background that the first hostile bid to take over a regional electricity company has occurred; indeed, it is because of that background that it has occurred. It involves Northern Electric and Trafalgar House, but it could be any regional electricity company and any predator. With one or two exceptions, the scenario would be the same.
We should bear in mind the fact that the Government's privatisation White Paper envisaged retaining regional-based electricity companies to respond to local needs and to promote regional identity—that was the Government's policy at the time. That basic concept has apparently been abandoned by the President of the Board of Trade. Apparently, any bid for any regional electricity company is now authorised. It is open season because he has ignored—indeed, he has abandoned—any public interest in the matter.
Strong grounds remain for a reference of these issues to the Monopolies and Mergers Commission on public interest grounds.

Mr. Bernard Jenkin: What would be the point of referring a United Kingdom company's bid for a regional electricity company on public interest grounds when no such reference would be made in relation to a bidder from another European country?

Dr. Cunningham: I am not sure that that is necessarily true. A number of public interest grounds exist, including

not least the ability of the regulator to continue even with his weak powers in the face of a takeover by a multinational conglomerate, whether it be Trafalgar House or any other organisation.
The Labour party strongly holds the view that the bid should be referred. It is not alone in that view, as the hon. Member for Colchester, North (Mr. Jenkin) knows. That is the view of the National Consumer Council, the public watchdog. Its chairwoman, Lady Wilcox, has made that clear. She wrote to the Office of Fair Trading to raise key consumer concerns. She said:
Questions about issues like cross-subsidy and disposal of assets must be fully explored by the MMC to safeguard consumers … We believe this will become a major issue for consumers which needs to be tackled as soon as possible.
The letter goes on in that vein. No doubt exists, therefore, about what the council believes.
The industry regulator holds the same view, but it has been swept aside by the President of the Board of Trade. The very person appointed by the Government with a framework of regulation to look after consumers' interests believes that the reference should take place. That is not all. I have a copy of a letter written by three Back-Bench Conservative Members to their colleagues. It is from the hon. Members for Stockton, South (Mr. Devlin), for Tynemouth (Mr. Trotter), and for Ryedale (Mr. Greenway).

Mr. Tim Devlin: I am here.

Dr. Cunningham: I am pleased to see that at least one of the hon. Gentlemen is in his place. Apart from reiterating my point that
the privatisation White Paper sets out the case for retaining regional based electricity companies"—
the hon. Gentleman is right about that—those three Conservative Back Benchers say:
A reference by the President for the Board of Trade to the MMC is an appropriate way for the important issues raised by the Trafalgar House bid to be examined.
On this occasion, we can safely say that support for the reference exists on both sides of the House. It may come as some surprise to the hon. Member for Colchester, North that his Back-Bench colleagues do not share his view, but I thought that he would like to know that they share the Labour party's view. Perhaps the President of the Board of Trade will tell us how many other Tory Members have written to him expressing the same view.

Mr. Devlin: In the letter that I and my colleagues sent to many of our colleagues, we did not express a view as to whether Trafalgar House should be allowed to take over Northern Electric. We said that a number of issues needed to be explored. When I was on the radio the other night in Newcastle, one of the right hon. Gentleman's colleagues would not answer the question of what Labour would do if it were in power. Would it refer the bid or renationalise the industry? No Labour Members have yet said a word about their attitude to that.

Dr. Cunningham: I understand the hon. Gentleman's embarrassment at being found out, but there is no doubt that we would refer the bid to the MMC. I share his view. This is not a question of Trafalgar House, or of being for or against the management of Northern Electric or Trafalgar House. This is a test case. We know that all the other regional electricity companies will be up for grabs.
In the public interest, the matter should be thoroughly examined, and the MMC is the most appropriate forum in which to carry out that examination.
I hope that the President of the Board of Trade will tell us how many more letters he has had in that vein from his right hon. and hon. Friends. The hon. Member for Stockton, South and his colleagues the hon. Members for Ryedale and for Tynemouth will have their resolve put to the test, because at 10 o'clock tonight, they will be able to vote for a reference of the bid to the MMC. The hon. Member for Stockton, South has told his constituents that he wants a reference. Those three Conservative Members will have the opportunity to vote for that at 10 o'clock tonight. We and his constituents will be watching to see whether the hon. Member for Stockton, South puts his vote where, apparently, his beliefs are.
The President of the Board of Trade has no interest in the public interest. He is, after all, the man who boasted at the Tory party conference of his determination to intervene—he is the great intervener. He has failed another test, passed up another opportunity, and sold out on intervention in this case, as in many other cases before. His decision has produced a huge scramble for cash in the City. As we all know, every electricity company will become a target, not for investment in new plant or equipment, not for investment in new skills, education and training, and, above all, not in attempts to give consumers lower prices or better services; they will become a target in the battle to control private monopoly power to generate cash without competition, as those organisations have been doing since their inception.
To defend itself, Northern Electric is offering shareholders more than £500 million in cash or in marketable securities, including its share of huge windfall profits from the sale of the national grid, another sell-out of the taxpayer's interest by the Government. That offer will be financed, among other things, by huge borrowing, by more job cuts, as the chairman of Northern Electric has candidly admitted, and by reducing investment in the business—so much for long-term approaches to the future of electricity supply. Consumers and employees are the losers. Customers will, of course, pay heavily for the cost of the takeover, whatever the outcome of the struggle for control.
All of us, including taxpayers, will pay for all of this because Trafalgar House's bid will be significantly financed by its overseas tax losses, perhaps totalling some £300 million over time. Trafalgar House, cleverly, saw the possibilities for financial engineering, to acquire Northern Electric and make the taxpayer foot part of the bill. At least it made a gesture to consumers, with the offer of a rebate of £20 per consumer, or perhaps per household. Consumers are rightly asking themselves, "If all that money is available to battle for control, and if rebates can be given, why are we paying so much for our electricity?" Why is the regime so lax that all that money can slosh around in the system to benefit shareholders but not consumers?
Employees are asking, "If the companies are so profitable and desirable, and are such cash generators, why should we pay for all this with our jobs?" The likelihood is that those events will be replicated in other regional electricity companies. In Yorkshire, the

midlands, the north-west o and elsewhere, consumers, employees and taxpayers will foot the bill for the President's indifference to their position.
The Government sold Northern Electric for £240 million. Trafalgar's first offer is £1.2 billion. The difference of £770 million is the amount by which the Government shortchanged the taxpayer with their ill-judged privatisation. There are 12 RECs. All were underpriced and the loss to the taxpayer runs to billions of pounds. The fact that Trafalgar values Northern Electric at £1.2 billion says it all. Mr. Kevin Lapwood of Smith New Court said:
It represents a capitulation on the part of the politicians"—
he meant the right hon. Gentleman and his friends—
and the regulator.
That view is not surprising, given that RECs now have market capitalisation of more than £16 billion, compared with £5.2 billion four years ago.
It is not as though consumers had a good deal on prices. Figures from the Library show that between December 1990 and January this year, electricity prices rose by 4.3 per cent. in real terms against a background of falling world basic energy prices—oil by 26 per cent., gas by 27 per cent. and coal by 18 per cent. So much for claims that privatisation has done a good job for consumers.

Mr. Hartley Booth: Why does not the hon. Gentleman accept that, since privatisation, electricity prices have fallen by 3 per cent. on average?

Dr. Cunningham: Because they have not. The hon. Gentleman is confused. Last September's study by London Economics on productivity growth in RECs stated:
No clear privatisation effect is apparent. Whilst there is a slight improvement in the overall average productivity level in the post-privatisation period, this is so small as to not be considered statistically significant … Furthermore, there is no consistent record of improvement among the 12 firms that would suggest that privatisation can be associated with efficiency gains. In fact, while six of the companies improved productivity, three experienced slower productivity growth in this period, two were unchanged and one company actually became less efficient … We cannot accept the hypothesis that productivity growth in the distribution industry as a whole is higher in the post-privatisation period than in the period before.
There is no escaping the conclusion that in privatising RECs, the Government got it hopelessly wrong. Directors and shareholders are winners, while consumers, taxpayers and employees are the losers—as are energy conservation policies, long-term capital investment and, ultimately and disastrously, the future of the coal industry and mining communities.
I put specific questions about the Trafalgar House bid to the President and his Ministers before and received no answers, but I will try again. Are the assurances given to the President by Trafalgar House legally enforceable—yes or no? If regulation is unable to protect consumers now in respect of a stand-alone utility, will it not be completely inadequate to deal with multinational conglomerates? The regulator thinks that the answer is yes. What is the right hon. Gentleman's answer?
Is it appropriate for the bid to proceed when the Securities and Futures Authority, the Securities and Investments Board takeover panel and the right hon. Gentleman's officials are investigating the conduct of the Swiss Bank Corporation in respect of share deals in


Northern Electric? Is not it possible that at least some of those inquiries may lead to proceedings under the Criminal Justice and Public Order Act 1993?
Who tipped off Trafalgar House last Monday, 13 February, that the President did not intend to refer the matter to the Monopolies and Mergers Commission? Trafalgar clearly knew last Monday, before any public announcement by the right hon. Gentleman. As he was in London on Monday, he clearly made his decision then, so why not make a statement to the House? That Trafalgar House knew on Monday is confirmed in a letter to my right hon. Friend the Member for Bishop Auckland (Mr. Foster) from the Director General of the Office of Electricity Regulation. Professor Littlechild wrote:
Following the announcement of the Secretary of State's decision, members of my staff met Trafalgar House representatives on Tuesday 14 February.
So far, so good. He adds:
The meeting was arranged in the afternoon of Monday, 13 February.
That was the day before the announcement. Professor Littlechild concludes:
I hope this information is helpful.
It is, because it tells us that notwithstanding the right hon. Gentleman's quasi-judicial role—his excuse for not answering questions in the House—he must have been in direct communication with Trafalgar House, telling it of his decision before having the courtesy to inform the House. He did not have the courage of his convictions or to tell Parliament of his decision. Instead, he announced it in a press statement the next day, after he had left the country. Who tipped off Trafalgar House before any public statement was made?
If the President was so sure that he had got it right, why did he not tell the House of his decision? He had every opportunity. We pressed the Department for a statement, but the right hon. Gentleman ducked it. If he had had his way, the House would not have had an opportunity to debate the issue. If the President and his colleagues had had their way, nothing would have been said in the Chamber. Our private notice question brought the Under-Secretary of State for Corporate Affairs to the Despatch Box last Wednesday, and our selection of this topic today has given the House the opportunity for debate.

Mr. Jim Cousins: Perhaps my right hon. Friend would like the news in a parliamentary answer that I received shortly before this debate. The President of the Board of Trade received the advice of the Director General of Fair Trading on the matter on 2 February. Twelve days passed before the announcement to the House. A meeting with Trafalgar House was held at the right hon. Gentleman's behest on 13 February. Is my right hon. Friend disturbed by that information?

Dr. Cunningham: My hon. Friend is just confirming what is apparent—that the President of the Board of Trade, or his hon. Friends or officials, had conveyed to Trafalgar House long before the announcement of his decision, what the effect of the decision was when that decision was clearly in its interests.

Mr. Chris Mullin: Would this be the appropriate moment to remind the House that Trafalgar House has given £600,000 to the Conservative

party since 1979? Does my'right hon. Friend think that it is possible that there is an inside track for companies that enjoy this close relationship with the Conservative party?

Dr. Cunningham: I suppose that Tory Members would describe that as throwing public money at the problem.
The regulator clearly believes that his powers are insufficient to deal with an electricity company wholly owned by Trafalgar House. Does the President of the Board of Trade support the regulator in his wish to require Trafalgar House to float off 25 per cent. of the company? Will he give us a straight answer to that question when he replies? The regulator is dissatisfied and has made a reference to the Monopolies and Mergers Commission because he cannot get satisfaction from Trafalgar House. Will the right hon. Gentleman overrule a reference by the regulator? Yes or no? The public interest reasons for a reference of the bid to the Monopolies and Mergers Commission are overwhelming. The President of the Board of Trade should think again. In its vote tonight, the House should oblige him to do so.

The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Michael Heseltine): I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
'applauds the improvements in performance in the electricity supply industry since privatisation; welcomes the benefits which customers are receiving in terms of lower prices and improved service; supports the continuing development of competition in the electricity market and the maintenance of effective regulation where this is necessary; and notes that the Director General of Electricity Supply will continue to promote competition and protect the interests of consumers.'.
In anticipation of this debate, I spent some time looking at the Opposition motion. If I may, I shall take the motion as my text. I hope that the right hon. Member for Copeland (Dr. Cunningham) will forgive me for sticking to the subject as expressed on the Order Paper.
Apparently, the reason for deploring what I have not done is that the bid by Trafalgar House for Northern Electric was unpopular with
the majority of Northern Electric's shareholders
who turned up at a meeting on 15 February. That is the first reason.
The second reason is that, apparently, Trafalgar House has no experience of
running a private domestic monopoly energy utility".
The third reason is that
the concerns of the Director-General of Electricity Supply about his ability to regulate a regional electricity company which becomes subsumed within a larger group
were ignored. The fourth point, to which the right hon. Member for Copeland referred, is
the ongoing inquiries being made by the Securities and Futures Authority".
The fifth point is
the expiry on 31st March 1995 of the golden share held by the Government in the 12 regional electricity companies".
Those are the reasons which the Labour party gave notice that it wished to draw to the attention of the House tonight.
I am at something of a loss to understand the thinking behind those reasons. Perhaps we can explore just what Labour Members have in mind. It seems that, if a


company has a meeting at which an undefined, unprescribed number of shareholders turn up, and if a majority of those who turn up hold a particular view, no matter how few they are, no matter the views of the others and no matter whether proxies are registered from the majority, the fact that those who turn up hold a view should be the determining factor. That is a curious constitutional innovation in the way in which British public companies should be run.
I find it fascinating that the Labour party believes that the view of a small number of possibly wholly unrepresentative shareholders should be the basis on which the President of the Board of Trade reaches his judgment. What about all the other shareholders who did not turn up? What about the majority who may not have expressed an opinion? Supposing that they were against the view of the small minority who did turn up? Am I supposed to ignore them? Am I not supposed to listen to their views and to a range of other people's opinions on the matter?
The fact is—[Interruption.]

Madam Deputy Speaker (Dame Janet Fookes): Order. There are too many seated interventions. I expect Front-Bench Members in particular to set a good example.

Dr. John Cunningham: I apologise, Madam Deputy Speaker; you are absolutely right.
It is no good the right hon. Gentleman coming out with this fraudulent nonsense about listening to people's views. He did not want to listen to any views. He did not want to come to the House, and he did not want to make a statement. He did not want to answer a private notice question, and he did not want a debate. The truth is that, with perhaps one or two exceptions, he did not want to listen to views.

Mr. Heseltine: The right hon. Gentleman could have put all that in his motion, in which case I would have addressed it. My point, to which the right hon. Gentleman has no answer, is that nothing is so lacking in intellect or logic as the suggestion that I should take the views of a minority of shareholders as the determining factor in such a matter.
The nearest equivalent I can think of immediately is the mass meeting of the trade union movement at which a minority of vocal militants were able to dominate the scene, which led to strike action. This is the sort of technique that the right hon. Gentleman thinks should be introduced in British public affairs. I am not prepared to have anything to do with such an argument.

Mr. Martin O'Neill: Will the right hon. Gentleman give way?

Mr. Heseltine: No, because I want to make a bit of progress.
I move on to the next argument paraded, which is the absence of any experience on the bidders' part of running a private domestic monopoly energy utility. This is said by the party that, for 40 years, has nationalised industry after industry after industry so that it can put trade unionists, civil servants and politicians in charge of the commanding heights of the British economy. This is the party that, for 15 years, has sat on the Opposition Benches.
Labour Members have never run any serious industry in their lives, yet they now claim the right to run the whole of the British economy. I have never heard—[Interruption.]

Madam Deputy Speaker: Order. Hon. Members must contain themselves.

Mr. Heseltine: If Labour believes that a company making a takeover bid must have had specific experience in the particular industry, it should say so. The fact is that lack of experience has never stopped Labour Members pursuing any policies of any sort in any circumstances. I cannot believe that they seriously believe that this argument should weigh with me.
I move on to the concerns of the Director General of Electricity Supply about his ability. Here I thought that the right hon. Gentleman asked some important questions, but I was intrigued that he managed to avoid any reference to the Director General—

Mr. Allan Rogers: Condescending.

Madam Deputy Speaker: Order. I am sorry to interrupt the Secretary of State, but I have made the point before that a continual running commentary from a sedentary position is not acceptable.

Mr. Heseltine: I come back to the point. How can the right hon. Member for Copeland pray in aid the views of the Director General of Electricity Supply, important though his views are, without reference to the Director General of Fair Trading? There was a difference between the two regulators, which I freely admit, so I had to weigh the advice that I was given from two different regulators. I chose to follow the advice of the Director General of Fair Trading.
I found it absolutely fascinating, having listened to what I thought at the beginning of the right hon. Gentleman's speech were to be paeans of praise for the Director General of Electricity Supply, that he provided a catalogue of criticism on how the industry had been badly regulated, how prices—apparently—had been allowed to go up and how consumers had been ripped off. But all that is the responsibility of the Director General of Electricity Supply, the one person who, according to the motion, I am supposed to listen to, as opposed to the Director General of Fair Trading.

Dr. John Cunningham: Of course, the right hon. Gentleman is talking nonsense. The Director General of Electricity Supply can work only within the regulations laid down by the right hon. Gentleman and his right hon. and hon. Friends. The Director General of Electricity Supply is as much a victim of this hopeless, hapless system as are the consumers who are paying the price.

Mr. Heseltine: Now we have—I have not got the words down, but we will have them all in the morning, as they will be carefully recorded—an apparently hapless system that is so unsatisfactory. So I gather that the Labour party, if it ever had the chance, would want to change it. [HON. MEMBERS: "Yes."] That is very interesting. Would I be right in thinking that that would be the case not only for the electricity industry, but for a


range of other industries? [HON. MEMBERS: "Yes."] Yes, it would change industry after industry after industry. Where would the Labour party stop?

Mr. Stuart Bell: At the utilities.

Mr. Heseltine: It would stop at the utilities. So am Ito understand that the National Freight Corporation, British Airways and British Steel, and all those other privatised companies, have been given a clean bill of health? Are they now safe from the predatory instincts of the Labour party? We are talking only of the utilities. That is what one might call a halfway house. All the utilities are under threat from the Labour party.

Dr. Cunningham: No, they are not.

Mr. Heseltine: No, they are not. Let us not talk about a divided party. Let us not have references to splits. Are we for clause IV or are we against clause IV? Are we dealing with clause IV(a) or clause IV(b)? Who is the great arbiter between clause IV(a), (b), (c), (d), (e), (f) or anything else'? Is it the spokesmen for the party above the Gangway, below the Gangway, on their feet, on their bottoms? Who speaks for the Labour party?

Mr. George Mudie: rose—

Mr. Michael Clapham: rose—

Mr. Heseltine: I shall give way to both hon. Members.

Mr. Mudie: Will the President be serious about a matter that may be funny to him, but is of extreme importance to millions of consumers? The man whom the President has to represent consumers, the regulator, advised the President not to allow Trafalgar House to take over 100 per cent. of Northern Electric, and that 25 per cent. was needed for transparency. The man responsible for protecting consumer interest put that position. Will the President take that advice, which would give the customer some protection, or will he sweep it aside?

Mr. Heseltine: I would seriously like to help the hon. Gentleman. The Director General of Electricity Supply has responsibilities, which he is discharging. I understand that he is in conversation with Trafalgar House. Certain assurances have been given, and those are now being discussed by the regulator. It is right and proper that that should be taking place. What the outcome of those discussions will be, I do not know, because that is something within the purview of the director general. But the right hon. Member for Copeland raised some important questions, on which I want to be as helpful as I can to the House, such as the timing of the announcement.
It is perfectly true that, on Monday last week, I left for India. During that afternoon, I reached a judgment about the matter. It followed from that judgment, because I was interested in the assurances that Trafalgar House was offering, that officials in my Department pursued the matter, which they did.
Of course, it was not possible to announce the outcome, because we did not know at that stage whether such assurances would be forthcoming. It is also perfectly true that it fell to my hon. Friend the Under-Secretary of State for Corporate Affairs to make the statement. I would be the first to say that I felt uncomfortable, because I could see how the circumstances were developing. I shall share exactly with the House the dilemma that I faced.
I knew that I was leaving for India. It was a very important trip, as the House would recognise. There was nothing that I could have done, or that I would have wanted to do, to avoid it, and I am sure that no one in the House would have asked me to do so. But I knew that, if I were to have made the statement, it would have had to wait until I had returned on Thursday. I did not believe that information of such sensitivity would hold between Monday and Thursday.
Therefore, I took the initial decisions, and I instigated the consultations that were to lead to the assurances which were forthcoming, and which are now the subject of discussion. I believe that, in that way, I behaved perfectly properly.

Dr. Cunningham: Will the President tell the House whether those assurances are legally enforceable?

Mr. Heseltine: No, they are not legally enforceable. But that is not the end of the matter, because the powers of the director general remain. He has powers first—as he is now doing—to discuss the matters with Trafalgar House; and, secondly, he has powers to refer Trafalgar House to the Monopolies and Mergers Commission, if, in future, he should in any way feel the need to do so. So it is important to understand the balances that exist.

Dr. Cunningham: If the regulator determines that a reference should be made to the Monopolies and Mergers Commission, would the right hon. Gentleman accept that decision, or would he overrule it?

Mr. Heseltine: As the right hon. Gentleman knows, once that process is under way, I am in a quasi-judicial position. [Interruption.] Hon. Members must understand that someone in my position, a position which this House has put me in, as a quasi-judicial authority, is extremely constrained, and rightly so, in their actions. I cannot prejudge matters. I have to listen to all representations, I have to take all such matters into account, and I have to be guided by the very clear legislative framework within which I operate. The judgments are often complicated, finely balanced and difficult, but I reject utterly and absolutely any suggestion that such matters are not carried out in the proper and full way.

Mr. John Gunnell: Will the President comment on the assurances that have been given? Trafalgar House does not have a reputation for being a company in which there is total transparency. It is felt that cash assets are being transferred from one member of the group to another. Have we assurances that such movements will be transparent, so that Northern Electric's consumers may be sure that they are not paying to prop up some other member of the group?

Mr. Heseltine: The hon. Gentleman raises essential questions, and those exact issues are now being discussed by the director general and Trafalgar House. The director general is bound to do that. It is not for me to say that I support him in doing so. It is his legal duty so to do. I understand, as does the House, that that process is now under way. I also understand the need for that transparency, and the public confidence which would flow from it, to be in place.

Dr. Cunningham: Those are important points, as the right hon. Gentleman says. A question now arises over the apparently independent regulator having a right to make a


reference to the Monopolies and Mergers Commission. Is the President of the Board of Trade saying that he would respect that independent right? If the regulator were to act in such a way, would the President intervene again to refuse the reference?

Mr. Heseltine: I have no power to stop the director general referring the matter to the MMC. I have a right to challenge the view of the MMC in the recommendations that it makes, but afterwards. That would be done in public, after public debate, and I would have to account in public to this House or wherever appropriate for any decision that I took. I would hope that, like any Secretary of State from any party, I would exercise that discretion and make those decisions in the way in which the House would expect me so to do.

Mr. Richard Caborn: Will the President give the House his view on the notice presented by Offer, in terms of changing and varying the licence in relation to section 11(2) of the Electricity Act 1989? If there is an objection in 28 days, there could well be a referral to the MMC.
Will the President give us the Government's view about that variation of the licence which, I think, was printed in The Financial Times on 10 February, particularly in light of Northern Electric's position on pricing when it can effectively give shareholders about £380? That point was referred to a little earlier by my right hon. Friend the Member for Copeland (Mr. Cunningham). That was effectively price control, which could now vary the licence conditions that were printed in The Financial Times on 10 February. Will the right hon. Gentleman gives us his view about that?

Mr. Heseltine: The hon. Gentleman raises a complicated issue. It is not a straightforward issue, and I will not give him an answer off the cuff. However, I will ensure that he gets a proper answer, because these are highly complex and technical legal matters, and the House is entitled to be properly informed. Either my right hon. Friend the Minister for Energy and Industry will reply to the hon. Gentleman in his response to the debate, or I will ensure that the Chairman of the Select Committee receives a letter setting out the matter in detail.
We have now dealt with the substance of one of the legitimate concerns. I hope that the House feels that I have dealt with it at some length, and I do not apologise for that.
I was surprised at the suggestion that, if the takeover is successful—I do not know whether it will be successful or not—that is somehow centralising the decision-making in London. As I understand it, Trafalgar House has made it clear that it will leave the headquarters of Northern Electric where it is presently based. It will therefore remain a provincially based company.
I could not understand how the Labour party could argue in that way when, during the last half-century, Labour nationalised provincial company after provincial company and centralised the control of those companies in London. I do not understand why Labour should find it extraordinary that this Government have returned all those companies to provincial headquarters.
The fact that the water and electricity companies and the gas industry now have major provincially dominated headquarters is a very important part of the Government's process of spreading power throughout the country, as opposed to centralising it in London. It is not in the Labour party's gift to suggest that we are trying to centralise powers by the back door—

Mr. Allan Rogers: Will the President give way?

Mr. Heseltine: No, I want to say something else—

Mr. Rogers: The right hon. Gentleman is not telling the truth.

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): Order. Did I hear the hon. Member for Rhondda say that the Secretary of State was not telling the truth? If so, I hope that on reflection he will want to withdraw that comment.

Mr. Rogers: I said that the President of the Board of Trade was misleading the House. I will withdraw the remark that he is not telling—

Mr. Deputy Speaker: Order. That will not do at all. The hon. Gentleman must rephrase his comment.

Mr. Rogers: I never said that he was deliberately—

Mr. Deputy Speaker: Order. The hon. Gentleman must withdraw that comment.

Mr. Rogers: I withdraw my comment, Mr. Deputy Speaker.

Mr. Heseltine: We all make such mistakes. However, if I had made that mistake, I would have admitted it more quickly than the hon. Gentleman did.

Mr. Rogers: Will the right hon. Gentleman give way?

Mr. Heseltine: The hon. Member for Rhondda (Mr. Rogers) has just corrected himself. He should just sit there.

Mr. Rogers: rose—

Mr. Deputy Speaker: Order. It is clear that the President of the Board of Trade is not giving way.

Mr. Heseltine: Thank you very much, Mr. Deputy Speaker. I am not giving way.
The most distressing feature of the debate, of the speech made by the right hon. Member for Copeland, and of many of the comments made by Labour Members is the relish with which they want to portray a major British company like Trafalgar House in the least favourable light.
Trafalgar House is one of our leading overseas companies. It falls to my Department, and it is my privilege, often to spend a lot of time with the export managers, directors and executives of that company, travelling the world trying to obtain business. I wonder what kind of impact Labour Members feel it makes on the people whose lives are devoted entirely to trying to further British interests when they have to listen to the carping criticism that we have heard from Labour Members.
If by any chance the takeover bid goes through—I have no knowledge as to whether it will go through or not—Trafalgar House will then be able to point to its experience of running an electricity company in the United Kingdom as it bids for major world opportunities to install, run and manage electricity facilities internationally.
In this country, we must understand that fighting in the international marketplace today demands a scale of expertise in an ever-toughening competitive world. If, every time we try to put together a major British company to win in the world, we hear carping criticism from Labour Members who constantly talk about rip-offs, the consumers being robbed, soaring prices and any other slanderous attack they can find, they are simply undermining this country's ability to win in the world marketplace.

Dr. John Cunningham: Will the right hon. Gentleman give way?

Mr. Heseltine: No, the right hon. Gentleman has had a fair go. He knows full well that he and the rest of those on the Opposition Front Bench never miss an opportunity to undermine the excellence of British exporting companies across the world.

Mr. Clapham: Will the right hon. Gentleman give way?

Mr. Heseltine: No, there is another Opposition Member trying to get in on the same act.
We are now winning in the export markets of the world on a scale which would have seemed almost inconceivable two or three years ago. We should be immensely proud of that.
We heard another classic canard from the Labour party. I do not want to blame the right hon. Member for Copeland for originating it. The canard was that prices have been soaring—

Dr. Cunningham: No.

Mr. Heseltine: If the right hon. Member for Copeland did not say that, I apologise straight away. I turn my attention to where the blame should lie, and that is with the Leader of the Opposition. Obviously, there is another split in the Labour party. The Leader of the Opposition says prices are going up, but the right hon. Member for Copeland does not believe they are.
That is a welcome conversion—[Interruption.] The right hon. Member for Copeland should be quiet for a moment and decide which side of the argument he is on. I want to nail the Leader of the Opposition. When the Electricity Bill was before the House, the right hon. Member for Sedgefield (Mr. Blair) said:
outside of the Conservative party and the Department of Energy, it is barely an issue that prices will rise because of privatisation."— [Official Report, 12 December 1988; Vol. 143, c. 684.]
What has happened? Prices to customers have fallen. They are down by 9 per cent. in real terms to domestic users in the past two years. Industrial consumers have also seen falls in real terms. That record compares with a real increase of 5 per cent. in industrial prices, and a 22 per cent. increase in domestic prices under the last Labour Government.
The right hon. Member for Copeland cannot deny that he said that the quality of service has not improved. However, there has been an 80 per cent. reduction in the

number of domestic customers who have been disconnected. Customer complaints to the regulator are falling. The right hon. Member for Copeland then said that investment was not taking off. However, the electricity industry has increased investment by more than 10 per cent. in real terms since privatisation.
Productivity is also rising. It is perfectly true that the regional electricity companies have reduced staff in comparison to pre-privatisation levels. They have introduced more flexible work patterns and pay bargaining. However, is Labour arguing that we must continue to employ people in companies that could achieve the same results with fewer people? Is that what Labour Members are saying? If they are saying that, how would they achieve productivity gains to pay the real increases in wages, upon which real increasing prosperity depends?
Whenever there were job losses in any industry, Opposition Members never said, "Britain is becoming more competitive." They tried to pretend that we could freeze—fossilise—our industrial and manufacturing capability in the chaotic world that we inherited from them 15 years ago. That simply is not an option. It was not an option then—that is why they lost power—and it is not an option now. We are winning so much extra export market because we have turned the tide of British productivity.
In this debate, as in all others, Opposition Members cannot come to terms with the fact that it is only within the private sector that we will make the gains upon which the increasing wealth of this country depends. Opposition Members talk about shareholders doing well. I take credit for that and pride in it, because I know that shareholders are the pensioners, the people with the insurance companies, the people who are the savers, and the workers in industry who bought shares in their companies. One should rejoice in that, not condemn it left, right and centre whenever one has an opportunity.
The Labour party cannot come to terms with the fact that, 100 years ago, some lunatic dreamed up the idea called "socialism". It is bust, it is finished, and that is why Labour Members are on the Opposition Benches, and will stay there.

Mr. David Clelland: I do not intend to take up much time because this is a short debate. I come not to praise Northern Electric or to condemn Trafalgar House, but to refer to the concerns of users, employees and some of the shareholders of Northern Electric. At a special general meeting in Newcastle last week, to which reference has been made, the individual shareholders who attended the meeting and voted overwhelmingly against the threatened takeover were heavily outvoted by the proxy votes of big institutions. So much for the so-called benefits of wider share ownership, which privatisation promised. That point is made in the motion, and well the President of the Board of Trade knows it. The fat cats still call the tune and their poodles in the Tory party dance to it. That might be a rather badly mixed metaphor, but it is appropriate.
I have no particular sympathy with Northern Electric. The company is responsible for 700 job losses since privatisation, a further 800 job losses between now and 1997 and, we are told, about 100 job losses per year after


that, in search of more efficiencies. I look forward to the day when directors will be rewarded according to how many jobs they create rather than how many they destroy, which does not seem to require great genius.
While all those jobs have gone, putting pressure on remaining employees to produce the same and more, the salaries of members of the board of Northern Electric have risen sixfold. The company chairman now makes more money in his lunch hour than the waitress who serves him makes in a whole week. On top of that, senior directors stand to make more than a quarter of a million pounds each from shares obtained by virtue of their position as directors.
To try to stave off the Trafalgar House bid, the company has offered what has been described as a package of perks, the cost of which is reflected in the forecast job losses after 1997 and the decimation of the investment programme that we were told would be one of the great benefits of privatisation.
What of electricity users? I refuse to call them customers. They do not go out shopping for electricity. We are told that the price of electricity has come down since privatisation. Of course, that means since 1991. Electricity prices were hiked up before privatisation in order to make the sell-off more attractive and to allow for a fall after privatisation so that board members could tell us how clever they were and justify their huge salary increases. Users, along with employees and the investment programme, too, will bear the cost of that struggle for power. Last week, BBC North produced a programme about the matter, entitled "Better the Devil you know". That is the theme which the majority of northern Labour Members, electricity users—which, of course, includes all of us—and employees have adopted during this sorry saga. There are implications for the rest of the industry and, of course, for the taxpayer, estimated to be about £270 million in lost tax revenue if the takeover goes ahead.
The electricity supply industry cannot be treated as if it were a sweet factory. It is not like any other industry. It could not possibly be allowed to collapse and threaten the continuity of supply. In such circumstances, however unlikely, even a Tory Government would be forced to step in. We must remember that a Tory Government nationalised Rolls-Royce to save it from extinction. The industry should never have been removed from the public sector. I for one certainly look forward to the day when it might be returned to it. [HON. MEMBERS: "Ah!"] Yes, indeed. I share that hope with the vast majority of the British public, certainly people in the north-east who now suffer because of privatisation.

Mr. Piers Merchant: Does the hon. Gentleman share that aspiration with his own Front-Bench colleagues?

Mr. Clelland: The Labour party believes that the major utilities should be in public ownership or control. [Interruption.] That is without question; there is no argument about that. In the meantime—[Interruption.] If the President of the Board of Trade wants to go into the matter a little more deeply, I am sure that the time will come when we can do so.
In the meantime, we must suffer the unedifying sight of the money market squabbling over an industry that is vital to the lives and livelihoods of millions of people who are helpless to influence the outcome, because their Government have relinquished control over the industry and prefer to leave its fate to market forces.
The campaign against the takeover that is now being waged in the north-east is about not Trafalgar House but the retention of control over a vital industry—vital to the regional economy and to everyday life—within the region that it serves.
In his recent answer to me, the President of the Board of Trade confirmed that he regarded the continued regional basis of the electricity supply industry to be an important principle, but there seems to be no sign that he or the regulator have any intention of enforcing that principle. On the contrary, his refusal to refer the matter to the Monopolies and Mergers Commission has led to open season on other regional companies and the creation of even bigger monopolies. In his answer last Wednesday to my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cousins), the Parliamentary Under-Secretary of State for Corporate Affairs confirmed that the safeguards to which the President of the Board of Trade referred are not protected by statute. Indeed, the President of the Board of Trade confirmed that again tonight.
The major utilities are too important to be left to the financial juggling of the market. They are too important to our regional structure to be subjected to the threat of takeover or sell-off. It is the job of Government to secure such services in the interests of the people and of the country. If the Conservative Government will not do that, a Labour Government will.

Mr. John Sykes: I shall make a brief contribution. I am the vice-chairman of the Conservative Back-Bench deregulation committee. I am also the Member of Parliament for Scarborough and Whitby, which are supplied by Northern Electric. I am a business man with a factory which is on the coast and which consumes electricity supplied by Northern Electric. I am also a householder who spends most of his life trying to turn out the lights that his children have left on. I do not, however, speak as a shareholder. I carry no torch for either company involved in the discussions.
In my dealings with Northern Electric, I have found it responsive and helpful. Towards the end of last year, there was a proposal to erect pylons from Lackenby to Whitby, which would have vaulted across some of England's finest coastal scenery and through many villages in my constituency. I should like to record my thanks to Northern Electric for shelving those plans. I hope that they remain firmly on the shelf.
The motion is yet another example of scaremongering and nit-picking. Opposition Members know nothing of the world of business, in which takeovers, both hostile and otherwise, are commonplace. Their experience as employers is limited to the countless research assistants who saturate the Palace of Westminster, yet their motion feigns concern for small shareholders whose company may be subjected to predatory or hostile bids. The only hostile or predatory bid that the shareholders need to fear is that which might come from Opposition Members should they seize the reins of power.
The motion undermines Trafalgar House in a most dishonourable manner that suggests an "absence of any experience". The absence of experience lies entirely on Opposition Benches. In the world of business, it is not unusual for a company to diversify by acquiring unrelated interests. Sometimes enormous opportunities flow because of the dovetailing of such interests with those of other companies within the group.
In the Financial Times, Trafalgar House is listed among the diversified industrials, as is the Hanson Trust. No one ever asked Lord Hanson what he knew about batteries before he bought Ever Ready, about cigarettes before he bought Imperial Tobacco, or about bricks before he purchased the London Brick Company. No one bothered F.H. Tomkins when it took over Firth Cleveland or Rank Hovis, yet all those companies have thrived.
I would not mind if the Labour party thought that Trafalgar House was a stranger to the north-east, but it is not. The firm owns Redpath, John Brown Engineering, the Davy Corporation and the Cleveland Bridge Company, which is based in Darlington. The last named has just won the Hong Kong harbour bridge contract, which is much to its credit, and many jobs will flow from the company's activities.
Many people in my constituency, and thousands of others in the north-east, rely on Trafalgar House for their employment. It is wrong of the Labour party to suggest that some of those people might lose their jobs as a result of the takeover. It made the same prediction when Rowntree was taken over by Nestle, but the factory in York has thrived.
If there is any danger to employment, it is presented by the Labour party, a party whose members attacked the Japanese for so-called "alien practices" when Nissan came to the north-east, a party that wants to impose a European job-shredder on companies in this country in the form of the social chapter, and a party masquerading as the business-friendly party of the 1990s. Yet beneath the veneer lurks the same old monster, intoxicated with the urge to regulate and tax. I urge my hon. Friends to reject the Labour motion with the contempt that it deserves.

Mr. Nick Harvey: The consequences of the President of the Board of Trade's decision not to refer the Trafalgar House bid are vast not only for this case and the many consumers whose interests it affects, but rather more for the precedent that it will set for the future. I echo the comments of the right hon. Member for Copeland (Dr. Cunningham) in expressing disappointment that the Government did not choose to bring the matter to the Chamber of their own accord.
The stock market is already preparing itself for the prospect of a wave of takeover bids for regional electricity companies. The Trafalgar House bid sets a precedent for the takeover of utilities by companies that do not have the supply of utilities as a core business. Questions legitimately and reasonably must be addressed about the commitment of those firms towards the electricity industry.
There is a central contradiction in the decision not to refer the bid, between the Government's stated objectives when they privatised the electricity companies and the attitudes implicit in the decision to give the bid the green light. The prime example is the golden share. The

Government's golden share was intended to protect companies such as Northern, presumably because the Government believed that ownership was a matter of public interest. Certainly, previous Secretaries of State for Trade and Industry have seen the provision of power to several million customers as a matter of public interest. There was enough of an interest to ban bids from state-owned firms from abroad, which have been tipped by some to follow the Trafalgar House example now.
Most people naturally presumed that the public interest was the justification for the golden share in the first place, and that its purpose was to provide a defence against precisely such a bid. Perhaps the Government would like to explain the purpose of the golden share in the light of the fact that it has been used only to delay a takeover, rather than to prevent one.
Another central argument about the privatisation of the industry and a stated objective of the Government was on the importance of regional identity. Under the present set-up, there is scope for substantial input from regional electricity companies into their respective regions, whether it is in the arts, sport or any other issue of community importance. Without saying anything specific on this case, I believe that the likelihood of foreign or multinational companies which bid for the regional companies having the same high commitment to the regions is minimal.
Even if the company headquarters remained in Newcastle, decision making would in reality move to London, to the detriment of the north. There have been notorious examples in other cases, when promises that have been given about corporate headquarters have been nakedly broken after the event.
Another stated objective of privatisation was to deliver the efficiency and strength that would benefit customer, employee and company alike. Yet a precedent is now being set for allowing takeover bids from companies which have manifestly failed to prove that they can improve investment or even long-term customer care.
We have been offered only four promises on the maintenance of standards, and the President of the Board of Trade admitted this evening that they had no legal substance whatever. The assurances need to be judged in the light of certain economic truths. Takeovers create a self-perpetuating climate of insecurity, and that has already added £1 billion to the value of the regional electricity companies on the market.
Dividend payments will rise, as they must if the price of shares is not to drop, leaving companies even more vulnerable. Prices in turn will rise, as the price cap allows, to provide the cash flow needed to maintain high dividends and, for the very same reason, jobs will be cut. Investment will not be exempt from the squeeze required to keep shareholders happy, and that runs to the core of the problems that have beset British industry for such a long time.
As a nation, we distribute far more in dividends than our competitors—double the proportion, for example, of Germany or Japan. The results are higher prices for customers, the threat of redundancy for workers and the loss of essential investment in the industries.

Mr. Barry Porter: Does the hon. Gentleman have evidence for his assertion that prices are higher or that customers are in some way disadvantaged because of dividend policy? There is no evidence of that.

Mr. Harvey: It is self-evident that if more is given out to shareholders in the form of dividends, less will be available for investment, salaries and any other cost that a company might incur.
Serious questions need to be asked about Trafalgar House's commitment to fulfilling the Government's stated objectives at the time of privatisation. What was the purpose of the golden share? How committed is Trafalgar House to the region or to investment? How determined is it not to shed jobs for the sake of maintaining dividends? What evidence is there that the takeover is not simply designed to give Trafalgar House tax advantages? Has not the company admitted that financial engineering is part of the rationale of the bid? Will the customer benefit from the new ownership?
Those questions will undoubtedly return when other regional electricity companies are subject to takeover bids. For that reason, the bid should have undergone a more thorough and impartial investigation at this time. The President of the Board of Trade's explanation that he had two different pieces of advice from the two regulators and chose one rather than the other does not stand up to much examination. The Director General of Fair Trading has a general concern on competitive issues, but the Director General of Electricity Supply has a much more specific interest in the industry. The fact that either of them raised serious concerns or interests should have amounted to a case for a reference to the Monopolies and Mergers Commission. The idea that the two were looking at the same issues does not seem to be right at all.
A referral to the MMC would have been appropriate and desirable, considering the precedent that the case will set. On Wednesday last week when the issue was briefly debated, Conservative Members claimed that those pressing for a referral to the MMC did not understand the market. The truth is quite the opposite. We understand the market only too well—well enough to understand the difference between competition and monopoly, well enough to understand the difference between a company that is subject to all the rigours of the market and a company whose customers have nowhere else to go, and well enough to understand the difference between a chief executive and a management team whose salaries reflect a genuine market value and those who are in the privileged position of having a trapped market.
We understand that the regional electricity companies are fundamentally different from the majority of other private companies, and that is why they are regulated. That is why a case such as this should be referred to the MMC. The electricity industry is not internally competitive. It provides a necessity that people cannot do without and, as such, it has social obligations to its region and customers. That was the reason behind the golden share and the reason why there is a regulator.
This situation is typical of the many problems that the Government's economic policy is running into. The Government's "hands-off' approach is undermining Britain's competitive aspirations. It seems that

asset-stripping, job-shredding, executive riches and financial engineering are now the ideals of the laissez-faire system. Those who claim—as the Government do—to be the champions of the free market must find that something of an embarrassment.
A sound takeover proposal has nothing to fear from a referral to the MMC for investigation. If Trafalgar House could have proved that the various fears that had been raised were unfounded and that the customers, employees, the region and the company would not be disadvantaged, that would have become apparent. Unfortunately, the opportunity has been missed, so the fears remain. The President of the Board of Trade has declared open season. The customers of Britain stand to lose out.

Mr. Hartley Booth: We have had this evening from the right hon. Member for Copeland (Dr. Cunningham) a parade of verbiage which has not done his argument any favours. He talked about exploitation, a licence to print money and ripping off the consumer. From hon. Members behind him on the Opposition Benches we had a parade of fat cats, as if we were not well aware that that was the dream of the Labour party. It dreams about the horror of fat cats. In the mythology of the Labour party, fat cats are companies that make profits. That is what Labour Members want to get rid of—any company that makes a profit.
Opposition Members have shown no appreciation of what privatisation produces. They have shown no understanding of how it reduces the interference of bureaucrats and the lack of motivation that prevails in a state-organised utility or company. To quote the words of a former Treasury Minister:
When the government owns, an owner's concerns dominate its thinking. If we look at parliamentary records for the 40-year period after World War II—when nationalisation was at its peak—debates on the state-owned industries focused on such things as investment needs, losses, debts, labour relations, and strike records. Little time was spent on Parliament's more diffuse obligation to consumers.
The Opposition have shown little, if any, understanding of the market. There has been a reference or two to customers, but the regulator was not referred to as a constraint on an entrepreneur and a business, which is what he is in practice. No, not at all. The regulator was paraded before us as an example of the alleged failure of my right hon. Friend the President of the Board of Trade.
Opposition Members have shown no appreciation of the role of the investor and the City. There was a reference from the Conservative Benches, but none came from the Opposition Benches, to the fact that probably everyone in the Chamber, many millions of people in the north of England and many millions of people who are represented by Opposition Members have a stake in what was going on. They have a stake not because they are direct investors but because they have pensions or policies. They have a small stake in the City institutions that happened to vote in the majority to put the bid through in what is referred to in the motion as the "meeting of 15th February".
Nor is there any understanding on the Opposition Benches of the performance of the electricity companies since privatisation. The right hon. Member for Copeland said that I was wrong when I intervened to say that there had been price reductions since privatisation. I can give


him and the House my source. It is a small booklet available in the Library of the House of Commons. It says:
In the case of manufacturing industry, the latest DTI figures"—
this was published last year—
show that average electricity prices have fallen in real terms by nearly 7 per cent. in recent years.
Domestic consumers are also starting to benefit from lower prices. Overall, real terms domestic electricity prices have fallen by over 3 per cent. since privatisation, and by 7 per cent. in the last two years.
I challenge the Labour party. Perhaps it has better figures. There have been real reductions in prices to both domestic and manufacturing consumers of electricity. Instead of the proper appreciation of the industry that we would have expected from Opposition Members, the politics of envy has been paraded intermittently through the debate. It positively replaces the understanding of management and its role.
I understand that some of the directors of utility companies have received huge pay increases. They may well have demoralised some of their employees by taking rises when others have taken pay cuts. That may be a management mistake, but it has nothing to do with the politics of envy. That, and the failure of the Labour party to make the broader point, shows exactly where Labour Members are coming from.
What of the performance of the Labour party with nationalised electricity? We have heard a great deal of rhetoric, but we have not yet heard precisely what was the Labour party's performance during its last tenure of office. Prices rose by 2 per cent. Was that between 1974 and 1979? No. Was it per year? No. Was it six monthly or even three monthly? No. Every six weeks electricity prices rose 2 per cent. between 1974 and 1979. That is the performance of the Labour party. It cannot get away from it. Comments such as the one that we heard a few moments ago from the hon. Member for Tyne Bridge (Mr. Clelland), in which he suggested that we raised prices artificially moments before privatisation, totally fail to recognise that the Labour party increased prices 2 per cent. every six weeks between 1974 and 1979. It was a hypocritical statement. What about concern among the customers? That was a bust fuse, too.

Mr. Barry Sheerman: I wish to deal with a different issue—the possible changed ownership of the regional electricity companies in the context of its effect on the strength, diversity and success of local and regional economies. You and I share the same region, Mr. Deputy Speaker, so I am sure that you will not mind me referring to our region as an example of the issue that it is most important for the House to consider.
Whatever can be said about privatisation, the efficacy of regulation and the balance of benefits to consumers or shareholders, there is one indisputable fact. Electricity, water and, to some extent, gas companies can and do act, under private or public ownership, as positive forces in the building and rebuilding of a viable industrial base in the regions of Britain.
There is clear evidence of strong support and commitment to the regions on the part of the utilities and certainly my local regional company, Yorkshire Electricity. The company is built on its relationships in Yorkshire. It expanded its involvement in the economic

development of the region. The company is active in assisting small, medium and other enterprises on a variety of issues. It involved itself extensively in a range of local initiatives such as the Yorkshire and Humberside Development Association. It supports local universities and works to develop profitable partnerships with training and enterprise councils, chambers of commerce and the institutions that seek to secure a dynamic life for the region. Opposition Members would be poorer if we did not recognise some of those facts.
In that respect, Yorkshire Electricity is not dissimilar to some of the other privatised utilities. All three companies have put themselves at the heart of the economic and industrial regeneration of the region, whatever else we may think of them.
Given the constraints of European directives, Yorkshire Electricity and many other regional electricity companies have consistently tried their utmost to maintain their position as significant purchasers of locally derived goods and services. In other ways, such as in its proactive role in local campaigns involving disabled people, children and the environment, Yorkshire Electricity has become a familiar and reliable member of the local community. Opposition Members understand that.
At a time when the arts are increasingly dependent on private-sector sponsorship, local electricity companies, such as Yorkshire Electricity, have become most important benefactors and have fulfilled valuable social and cultural roles in the regions.

The Minister for Energy and Industry (Mr. Tim Eggar): I apologise for interrupting the hon. Gentleman in full flow, but I have been listening carefully to what he has said and he seems to be giving us a eulogy to privatisation. Can he confirm that?

Mr. Sheerman: I am trying to point out that, under both public and private-sector ownership, Yorkshire Electricity, NORWEB and Northern Electric have played an important role in supporting the regional economy. Perhaps, after hearing something that he might like, the right hon. Gentleman will hear a few things that he will not like. I am trying to give a reasonably well-balanced group of remarks.
In concert with local authorities, regional electricity companies have developed effective partnerships on a range of questions, including public lighting, crime prevention and energy efficiency. We have observed the growth of an awareness on the part of those companies that their future prosperity and development are inextricably linked to that of their consumers and the community that they serve. On that basis, they represent a major regenerative influence and have the potential to diversify and develop exciting initiatives in the regional economies.
Opposition Members would be foolish to ignore that, but the move that the President of the Board of Trade has set in train will at one stroke destroy all that potential. He is often seen as a man of action, rather than deep thought. In this instance, his thoughtlessness could do incalculable damage to our other goals and objectives in the regions. He espouses many other causes to try to help the development of local industry and small and medium-sized enterprises. He expresses concern about regional diversity and growth and about the ability of small and medium-sized enterprises to flourish. Indeed, his competitiveness White Paper, his interest in regional


supply networks, local sourcing and business links all point to a commitment to, and concern for, a successful and diverse regionally rooted economy.
However, all that is hot air if we judge it by the effects of the right hon. Gentleman's failure to refer the bid for Northern Electric to the Monopolies and Mergers Commission. All the effort that is being put into a range of initiatives by chambers of commerce, TECs, local authorities, universities and colleges could be utterly wasted if his decision on the ownership of regional utilities remains unchanged. What is more, regional economies on the brink of real growth and development will fall back into decline, with yet another positive influence hived off to London or beyond.
Too often, we have witnessed the effects of a takeover that results in the ownership of a company transferring to a national or international conglomerate. The Government have not been very forthcoming about those sorts of decisions. To the detriment of local companies and whole regions, decisions are no longer made in the regions, or even in this country. Down-sizing, asset stripping and the mean bottom line are all that counts. Local and regional loyalties are consigned to the waste bin. The Government's policies have initiated and hastened that process time and again.
In our region, an example is the disastrous effect of the Government's initiatives and legislation on the brewing industry. Look at the, perhaps unintended but disastrous, consequences of the change in the franchising system for regional television. We have lost the independent Yorkshire Television, which has combined with Tyne Tees and is soon likely to be taken over by Granada.
Time and again, the Government's policies carelessly destroy the viability of local and regional industries. It is a sad day when a political party—whatever its other ideological follies and sheer wrong-headedness—abandons values that, at one time, it held dear. There was a time when the Conservative party believed profoundly in the diffusion of economic power and saw the strength of our democracy being rooted in strong regional prosperity. Today, they have sacrificed that belief, like so many others, on the altar of market forces with tragic consequences that will leave our regions permanently damaged, demoralised and disheartened.

Mr. Piers Merchant: I must start by declaring a minor interest. Like hundreds of thousands of people, including no doubt some Opposition Members, I hold a few shares in regional electricity companies, but not in Northern Electric or in Trafalgar House.
This has been an interesting debate for me as I had some knowledge of the predecessor to Northern Electric, the North Eastern electricity board, when I represented Newcastle upon Tyne, Central in the 1980s, before I gracefully withdrew to enable the present hon. Member for Newcastle upon Tyne, Central (Mr. Cousins), who has unfortunately left the Chamber, to pursue his political career, which I gather that he is still contemplating.
Much play has been made of the involvement of regional electricity companies, such as Northern Electric, in the general good of the regions. Before the companies were privatised—under the old nationalised set-up—the

regions and areas in which they operated received little support, yet the hon. Member for Tyne Bridge (Mr. Clelland) seemed to be extolling the virtues of nationalisation and promised that, when he had the opportunity, he would return electricity to state ownership. That would certainly strip away any opportunity for regional support to come from the unit serving the area.
I do not believe that the fact that ownership might change need in any sense alter a company's commitment to a region. When I was in the north-east, it was evident that many of the companies that gave great support to the region—I will not be unfair by picking out one or two—were branches of national concerns. They were not locally based or local companies, but simply had regional offices there. In certain cases, they had decided as a matter of policy to support certain regions. There is no necessary connection between where the corporate headquarters of a company is and ownership resides, and where its loyalty can be found, in terms of support for an area in which it operates. If that were the case, virtually no regional support would emerge from such companies. It would all be channelled to the area in which it had its corporate headquarters—central London or elsewhere. That simply is not the case.
For some time, I worked for Northern Engineering Industries, which was a proud north-eastern company, connected with the electricity industry in that it supplied generating plant. Eventually, Rolls-Royce took over NEI, which ceased to have its corporate headquarters in the north-east. At the time, there were many scares and it was said that when Rolls-Royce took over there would be wholesale redundancies in the north-east. That did not happen. There were some—I was one—but it was hardly wholesale. People also said that there would be wholesale reorganisation and that all the power would seep off to London or Derby, with no control left in the area. That turned out to be totally untrue. Control remained in the area and almost as many decisions were made there as before.
It was said that control would be completely lost, but the company—I refer to NEI but the same applies to Northern Electric—was ultimately controlled by its shareholders, the majority of whom did not reside in the region in any case. Moreover, like any large company, the company depended on the operation of capital, which in turn was largely controlled by the City. So the idea that the power base is automatically transferred when a company is taken over flies in the face of fact.
The Opposition seemed to believe that they could change the position and that, if they had state control of industry, the market could he ignored. That does not happen in reality. They now seem to believe that they can insulate an individual company against the operation of the capital market and that Northern Electric could be retained as a private company and protected against takeover bids. That, too, is wrong.
Trafalgar House has given guarantees, as my right hon. Friend the President of the Board of Trade said.

Mr. Rooney: Name them, then.

Mr. Merchant: It has guaranteed that it will give sufficient financial and management resources to enable Northern Electric to carry out its statutory and licence obligations; it will ensure that the Director General of


Electricity Supply is provided with such information from any company in the Trafalgar House group as he requires in relation to the exercise of those functions.

Mr. Mullin: Will the hon. Gentleman give way?

Mr. Merchant: I shall give way to the hon. Gentleman in a minute. First, I shall finish answering the question posed to me by naming two other guarantees: Trafalgar House will co-operate with the DGES in ensuring appropriate financial separation and financial independence for Northern Electric; and it will ensure that Northern Electric agrees to appropriate licence amendments.
Moreover, it is clear that if those assurances are breached, the DGES can refer the matter to the MMC, under the Electricity Act 1989.

Mr. Mullin: Did the hon. Gentleman not hear the President of the Board of Trade say that the guarantees given by Trafalgar House were not binding?

Mr. Merchant: If I remember correctly, my right hon. Friend said that they were not "legally" binding, but a guarantee is not invalid if it is not legally binding. In all our activities, we give guarantees that are not legally binding. The important qualification is that, under the Electricity Act, the DGES can still refer the matter to the MMC if those guarantees are broken.
Opposition Members, particularly those who represent north-east England, should rely less on what a few shareholders may have said at a public meeting that they attended, but should weigh up what would be in the best interests of the region. I do not speak in support of the Trafalgar House bid and I understand why people in north-east England feel strongly about the need to retain regional identity among the companies that operate up there. I hope that, if Trafalgar House goes ahead with its hid, it will give further guarantees about maintaining the headquarters of Northern Electric in the region and other links with the region.
Opposition Members should be careful, however, because takeovers are not necessarily bad and Northern Electric may be strengthened, having been taken over by a large outside company. It may benefit from being part of a bigger organisation with access to more capital and expertise; more markets for its products, as well the ability to draw on existing markets; and more financial strength to back it. Consumers may benefit from the better service that would thereby be provided. Opposition Members spoke of the critical job losses under Northern Electric. As part of a larger organisation, instead of simply being made redundant, people could be transferred to other jobs within that organisation. Consumers may benefit from lower prices and a better service as a result of a takeover, and current shareholders in Northern Electric may gain a better return. So the advantages of a takeover should be weighed in the balance. Neither must we forget the role of the regulator and his considerable power to protect consumers' interests.
We should look at the motives of Opposition Members who spoke strongly against the Trafalgar House bid and want it stopped or referred to the MMC. I understand their regional affections but some of their arguments are muddled and they do not see the positive benefits. I suspect that the smoke screen that has been thrown up is to hide the desire of sections of the Labour party to return Northern

Electric to public ownership, perhaps not in the direct way referred to by the hon. Member for Tyne Bridge, but in a more subtle and dangerous way, by extending the power of regulation and control in such a way that the company could not operate in a free market but would be at the whim of political manipulation and control.
We should not allow this debate to pass without marking the success of privatisation of the electricity industry. We must not allow one debate, important though it is, to obscure that fact. We are the only large European country to have reduced our electricity prices. Even including VAT, the price of electricity in this country is the fourth lowest in Europe, so all the talk about the rapid rise of electricity prices is inaccurate. Small companies pay among the lowest prices in Europe; since 1993, disconnections have been reduced by 95 per cent., and the number of complaints has fallen by 30 per cent. New options such as "Fuel Direct" are available for people who have difficulty paying. Customers who do not receive proper service now receive payment for default and there has been a revolution in management skills and attitudes. Whereas, in 1979, the taxpayer had to foot the bill when losses amounted to £50 million a week, now the Exchequer, and therefore the taxpayer, receives net proceeds of £48 million a week.
The case for privatisation has now been made, in terms not just of rhetoric but of hard fact and experience. I fear that this debate is motivated by a desire to spoil the truth with scares about what might happen in hypothetical situations. Using one example, every negative outcome that could possibly be conjured up has been used in an attempt to spoil the truth that should be put clearly before the House: privatisation has been a success for all involved, but particularly for the consumer.

Ms Ann Coffey: The Under-Secretary of State for Corporate Affairs made it clear to the House on Wednesday, in the debate on Northern Electric, that ownership of the regional electricity companies should be decided by the market, and that the Director General of Fair Trading, in his statutory advice, said that the merger did not raise any competition concerns. That is hardly surprising, as Northern Electric, like the other regional electricity companies, will be a monopoly supplier in the domestic market until 1998.
I am interested in the other public interest aspects of the bid. So far, they have been dealt with via advice to the President of the Board of Trade from the regulator and the Director General of Fair Trading, which has led to some discussion about the extent of the regulator's concern and the response of the President of the Board of Trade to that concern. I am further interested in why the regulator has not used his powers under the Electricity Act 1989, to which the Under-Secretary of State referred in the debate in the House last Wednesday, to refer the bid to the Monopolies and Mergers Commission on public interest grounds.
Section 12(1) of the Act says:
The Director may make to the Monopolies and Mergers Commission … a reference which is so framed as to require the Commission to investigate and report on the questions—

(a) whether any matters which —
(i) relate to the generation, transmission or supply of electricity in pursuance of a licence; and
(ii) are specified in the reference,


operate, or may be expected to operate, against the public interest; and
(b) if so, whether the effects adverse to the public interest which those matters have or may be expected to have could be remedied or prevented by modifications of the conditions of the licence."
Public interest is the key phrase. This goes beyond the definition of the director general's role in the Government's amendment, which says that the Government
notes that the Director General of Electricity Supply will continue to promote competition and protect the interests of consumers.
Public interest has a common law interpretation, and it may be considered as something to be distinguished from the private interests of individuals so that the expression is akin to the economic doctrine of the greatest good of the greatest number. Public interest is synonymous with public benefit. The question, of course, is whether a particular thing that is in the public interest is a question of the times and is a question of fact, to be decided in the light of all the circumstances and conditions as they exist at the present time.
It is easy to see how the MMC can decide whether a monopoly situation operates against the public interest by increasing prices or whether economies of scale outweigh that advantage. Even then, however, there are considerable problems in practice—I refer the Minister to the brewing industry. Ultimately, of course, the objective facts must be evaluated, and at the end it comes down to individual judgments. The President of the Board of Trade is an elected member of a democratically elected Government, totally committed to the free market, and believing that public interest is served by the free market. That is his belief.
What of the regulator, however, who is supposedly independent and unfettered by such ideology? Why has he not referred the matter in the light of the following issues? First, some £300 million in tax payments to the Treasury would he lost if the bid goes ahead. Is that not a matter of public interest? I can certainly think of things that the Treasury could spend £300 million on—raising nurses' pay beyond the miserable 1 per cent. that they have been given, for instance, and perhaps giving local education authorities the money to fund the teachers' 2.7 per cent. increase in salary which currently looks as though it will be funded by lost jobs.
Secondly, there will be further job losses in addition to those already lost. In that context, it is specific not only to this bid but to other electricity companies. Some 10,939 jobs have been lost since privatisation and it is likely that the number of job losses will increase as the regional electricity companies come under increasing pressure to give ever larger returns to shareholders to keep them happy. Is that not a matter of public interest?
If the regulator feels that those issues are not of public interest and do not merit referral to the MMC, he has a very narrow definition of public interest—as narrow as that of the President of the Board of Trade. Perhaps public interest is ultimately a matter of individual judgment based on individual belief. I do not know what the regulator's personal beliefs are, but in this bid, after the abdication of responsibility by the President of the Board of Trade, the regulator was the last protector of public

interest in the widest definition of the greatest good for the greatest number—a definition that I know is not shared by the Government.
It is important that the regulator should refer the bid to the MMC so that we can have a proper examination of the public interest and the public can see the independence of the regulator operate; otherwise he will open himself to a critical examination of his independence on public interest issues and bring into dispute the whole regulation system.

Mrs. Angela Knight: The hon. Member for Stockport (Ms Coffey) referred to the public interest. The interest taken in the debate by Opposition Members is shown by the number who are present; but I believe that the hon. Lady confused the public interest with interest to the public, given the allegations that she made. Let me point out to her that the public interest is best served by cheap electricity and an efficient company. An inefficient company will result in job losses and high prices; we want jobs and low prices, and both have been provided following the privatisation of this company and many other formerly nationalised concerns.
My right hon. Friend the President of the Board of Trade did a masterly demolition job on the motion. In their speeches so far, Opposition Members simply have not made their case. The motion refers to a meeting at which an unknown number of shareholders expressed concern about, or indeed opposition to, the proposed takeover. I have an answer for those shareholders: they do not need to sell their shares.
Another point—which has been answered time and again—relates to the Director General of Electricity Supply and his ability to regulate the industry. I was astounded when I saw that in the motion; I can only assume that it was tabled by someone who was not present last week when my hon. Friend the Member for Brecon and Radnor (Mr. Evans), the Parliamentary Under-Secretary of State for Corporate Affairs, concentrated on that and many other pertinent points relating to the takeover.
The third aspect of the motion that strikes me is the concern about the removal of the golden share from the regional electricity companies, which would apparently make them vulnerable to "predatory or hostile bids". A well-run, efficient company, looking after its customers and employees, need not fear a hostile takeover as it will know how to fight such takeovers effectively. If a company is insulated from the market place, it is insulated from the needs of its customers and will no longer act in the best interests of those customers. That is why companies must be left to trade openly and fairly.
If a lesson is to be drawn from the debate and the bid, it is that if regional electricity companies want to defend themselves from takeovers they must continue to reduce consumer prices. I also believe, however, that takeovers and amalgamations often produce a combined strength—to which my hon. Friend the Member for Scarborough (Mr. Sykes) referred—allowing companies to compete in an international market place which they would not have been able to do alone.

Mr. Mullin: Does the hon. Lady agree that one of the problems of the takeover culture that exists in British industry, and especially in the City of London, is that it


obliges companies to be remorselessly short-term in their thinking? One effect of regular takeovers is that everyone is concerned with making the fastest possible buck in the shortest possible time, which is not necessarily conducive to the long-term interests of either companies or customers.

Mrs. Knight: Remarks such as that can be made only by someone who has lived in a sheltered world, perhaps a lecturing establishment, rather than working for companies. If the hon. Gentleman had worked in industry, he would know what an extraordinary comment that was. If—as his expression suggests—he has now decided that he has worked in industry, I suggest that he go back and find out what it is all about.

Mr. Mullin: Will the hon. Lady give way?

Mrs. Knight: No. I have already given way once, and the hon. Gentleman will no doubt have an opportunity to have his say later if he catches your eye, Mr. Deputy Speaker.
It was extraordinary that, in the somewhat mournful diatribe with which he opened the debate, the right hon. Member for Copeland (Dr. Cunningham) should talk about the sale of the national grid. I have news for him: the national grid has not yet been sold. No doubt the right hon. Gentleman is already putting down yet more markers against privatisation. He criticised the difference between the sale price of the regional electricity companies and their valuation now, implying that the companies had been underpriced in the first instance. That increase in the valuation of the companies shows the improvement in their performance since privatisation. We should be proud of that: it demonstrates precisely what privatisation has done.
The hon. Gentleman then quoted one year's electricity price increase. What a selective use of statistics! I also obtained the statistics from the Library, which was the hon. Gentleman's source, and they show a continuing trend of price reduction. Long may that last. In the debate the anti-privatisation lobby has come back out and reared its ugly head. I am sure that we all recall the debate on British Airways when the hon. Member for Glasgow, Garscadden (Mr. Dewar) said that British Airways would be the pantomime horse of capitalism, if it was anything at all. British Airways is now the world's favourite airline.
When we debated British Telecom privatisation Opposition Members said that the public telephone box would be threatened with extinction. The number of call boxes has doubled, and what is more they work. These things mean something to people. British Gas prices have fallen since privatisation but that was never projected by Opposition Members. I do not know whether any of them read the journal Science in Parliament which is sent to us. The one which arrived last week had articles on nuclear power and nuclear privatisation by Greenpeace, which is in favour of privatisation. That is a turn-up for the book, and the articles are well worth reading.
As the House knows, I spent many years in industry before being elected to Parliament. In the years before privatisation the experience with nationalised companies, the state monopolies, was quite different and poorer from what happens today. Those companies, including the electricity companies, frequently ransomed British industry. They were able to do that because they were in state control and, ultimately, they were responsible to the

House of Commons. Hon. Members took a close interest in them and effectively ran them. That is why they were inefficient and why they made a loss of about £50 million a week.
Opposition Members should be honest about these matters. If those companies had not been privatised the money that they now contribute to the Exchequer would not be available to be spent on the health service, education and social security. They contribute a great deal weekly, monthly and annually to the Exchequer. If the Opposition do not want that they should say which hospitals and schools they want closed because that is the choice.
Irrespective of whether it is taken over I want this electricity company to continue to produce electricity as cheaply as possible for its consumers and in an efficient and practical way. That has happened because of the competition that has resulted from privatisation, and more competition is now entering the electricity industry.
One of the matters of substance in the debate is regulation. Hon. Members have said that the regulator has no power, that he is some poor, weak individual sitting in an office and that he cannot do or say anything. That is rubbish. The regulator's key duty is to protect customers and promote competition in the electricity industry. That is what we want and it is what industry and the consumer want. He is responsible for settling disputes, issuing licences and investigating complaints, and for making sure that prices are not excessive. His responsibility for fixing a price formula has resulted in a drop in price to the consumer—my consumers and those of every hon. Member.
Those are some of the benefits that have resulted from the work of the regulator. Why does no Opposition Member seem to be prepared to speak about some of the positive happenings? Why are they always so mournful and negative? Not only have consumers benefited because prices have gone down but complaints have gone down as well. There was always a stream of complaints about electricity and long waits for repairs. People never knew when they would lose power or when it would come back. What is more, one could never get through on the telephone but the charges continued. That was the reality of a state monopoly.
The reality for my family in 1988 was that the electricity supply was cut off on Boxing day and it was not reconnected until two days later. That would not happen now because there is an efficient organisation which 99.8 per cent. of the time reconnects the electricity supply within 24 hours. It answers the phone and it compensates people who have lost their power supply. That is the sort of improvement from which customers have benefited. Opposition Members should give the electricity companies credit for that. It is the sort of service that my constituents want.
I mention briefly someone who has been ignored in this debate—the shareholder. He is always portrayed as some awful, scrubby individual in a black mac who somehow makes a profit at somebody else's expense. Who are the shareholders? They are the pension funds—indeed, there are 15 million people in pension funds, which means 15 million of my and other hon. Members' constituents. I want their pension funds to increase so that they can benefit. Who else is a shareholder? Some 6 million private individuals, both men and women, have put their savings into such companies. I want the electricity company we


are debating to benefit them. The shareholder is an ordinary man or woman who has saved some money, put it to one side, and who has now invested himself or is in a pension fund. He has benefited and will benefit from the electricity companies.
It is shameful that the shareholder is either ignored or painted in the way that he was this afternoon. The great achievements of privatisation have been the efficiencies and improvements that have resulted in companies being taken out of the Government's hands. The Opposition have done some if-ing and but-ing about whether the regulation system should be changed for the utilities or whether it should be changed for everybody else. Some Labour Members spoke about renationalisation, but their Front-Bench spokesmen rapidly shook their heads. They do not know what they are in favour of, other than taking as much control as possible. That will do nothing for the companies, the customers or the shareholders.
There are one or two improvements, however, that I would like to see. I would like more competition within the industry and for there to be lower prices, especially for some of the major energy users. The prices that they pay should be brought closer to those paid by some of their competitors on the continent. I hope that the Government will consider that point.
Although I am conscious that the privatised utilities receive more scrutiny than almost any other company, I would like greater clarity and coherence in the remuneration packages of a few who work within them. There are many thousands of hard-working, first-class directors and managers in the industry and I would not want their efforts to be destroyed because of the perceived excesses of a handful. I want to ensure that the undoubted benefits to the consumer of privatisation are not muddied by over-concentration on the pay of a few. What I want is concentration on the successes; something that is not even mentioned in the Opposition motion.

Mr. Ronnie Campbell: When the President of the Board of Trade gave some guarantees about the electricity industry, my mind went back to his guarantees to the miners about the mining industry and the possible closure of 31 pits. Despite his guarantees, all 31 pits have now closed. His guarantees are not worth the paper that they are written on.
Our debate today is not about shareholders or about whether the industry is being run in the right or the wrong way. The industry has been privatised. I worked in a nationalised industry—the coal industry—all my life before coming to this place. Nationalisation has its faults—I could talk about them all evening— but this matter involves one big fault. It is all about a company—Trafalgar House—which is not into electricity, about the capitalist system, and about private entrepreneurs taking a stake in what was a nationalised industry.
The industry was privatised and, obviously, it put up the costs. Figures show that fact, and my hon. Friends have mentioned that prices have risen. Anyone who thinks that they have not should look at their own bills. We do not have to defend that view. I would not even try to defend it. People out there know that their bills have gone up since privatisation. That is where all the profits have

come from—hence Trafalgar House's bid for Northern Electric. It made the bid, not because Northern Electric does not deal with complaints any more, or is run badly, but because it has good cash flow and has made a whopping big profit. Trafalgar House wants the takeover to get itself out of the mire.
Tax was mentioned. I have raised the question of tax on two occasions, once with Prime Minister. I did not hear the President of the Board of Trade mention the tax that will be lost to the Treasury.

Mr. Booth: How does the hon. Gentleman deal with the point made by my hon. Friend the Member for Erewash (Mrs. Knight) that it is not just a few rich entrepreneurs making a profit? Privatisation is helping 15 million pensioners and others to secure their futures.

Mr. Campbell: As I have said, it is not a question of someone making some money for some dear old pensioners, but of a company taking over another company which has good cash flow and vast profits. The profits would be wiped out. It is not a question of anything else. All the hogwash that I heard the other night was crazy. This is about the money that Northern Electric has accrued and about the cash flow that is coming in.

Ms Hilary Armstrong: Is my hon. Friend aware that, because of the takeover, Trafalgar House is likely to save £270 million in advance corporation tax? The taxpayer will lose because the company will be able to set that money off in buying Northern Electric.

Mr. Campbell: That is exactly what I was saying. I asked the Prime Minister about tax last week, but he refused to answer because he was not aware of what was happening. Perhaps the Prime Minister has washed his hands of the matter and disagrees with the takeover because he is on the Treasury's side. I am sure that the Chancellor of the Exchequer will he peeved.
We are not talking about only £270 million. That amount is involved not just with one electricity company, but with all 12 electricity companies. One could speculate beyond that—one thinks of the water companies, with their vast profits and cash flow. Ministers cannot tell me that water bills have not been increasing for many years.

Dr. Robert Spink: Does the hon. Gentleman realise that, when those companies were nationalised, the taxpayer used to lose £50 million every week? The taxpayer is now gaining £48 million every week. Is that not a significant factor in the equation?

Mr. Campbell: As I said, I am not arguing about nationalisation in the old days. I know who ran the nationalised companies—Colonel Blimps and other people. It was a "give us a job" sort of thing. They ran a company but did not know what the hell they were doing half the time. That was the problem with nationalisation. There is nothing wrong with nationalisation if it done run properly. In the mining industry, we have always said that if we had been given the chance we would have run it properly. That is the problem—[HON. MEMBERS: "Ah."]
Of course I would renationalise, because the industry is a utility and it belongs in the public domain. Any energy company belongs in the public domain. I hope that the mining industry will be brought back into the public domain. I hope that the mining and electricity industries


will be returned to public ownership. However, when we return to power the companies will be in such a mess that we shall not have a penny to do anything, because the Government have got the country knackered now.
We heard tonight of insider dealing by the Swiss Bank Corporation, which is now buying shares in Yorkshire Electricity. Perhaps the Minister can say why—and perhaps the corporation is buying shares elsewhere. There is some hanky-panky going on, and it will come out in future. I hope that the press are listening because someone who delves deep enough will find that there is a rabbit away and that someone made a lot of money from the deal.

Mr. Mullin: I apologise for interrupting my hon. Friend, but the hon. Member for Castle Point (Dr. Spink) seemed to be under the impression that electricity companies did not make profits before privatisation. They all made profits. Northern Electric made profits of £50 million in 1985–86, £49 million in 1986–87, £47 million in 1987–88, and so on.

Mr. Campbell: The National Coal Board also made profits in a few years when I was there and broke even in other years. If the Minister for Energy and Industry examines the records, he will discover that for himself. That is not to say that they were all right. I could talk all night about the faults of nationalisation, but if I were a Minister in charge of nationalisation I would at least know where the faults lay, which the Minister does not. I know where nationalisation went wrong in the pits. It was not the fault of the miners or of the men at the pit head, but of people elsewhere.
The regulator is most important, but Professor Littlechild will see his job disappear. More takeovers will occur. Yorkshire Electricity will be next, and Trafalgar House may take over the whole lot, with the Swiss Bank Corporation. The companies may be formed into one huge multinational electricity industry, which would take us back to square one. If the regulator loses his powers, he may as well sign on the dole because the big companies will not take a blind bit of notice of him. They are interested only in making vast profits.
My hon. Friend the Member for Sunderland, South (Mr. Mullin) said that the Tory party has made £600,000 from Trafalgar House since 1987. Over the next few years, I will keep a close eye on how much the Tories get from this deal. I bet that they do very well from it—and from any company taking over other utilities, such as water.
I begin to wonder if a rabbit is not away here and that all this is being done on purpose. A Labour Government will soon be in power. I know what I would like to do, but I am not a member of the Front Bench. A Labour Government will tighten the powers of the regulator, but such takeovers will make a nonsense of him and put him on the dole. When Labour comes to power, we will not even be able to regulate the industry. It will he a case of dog eat dog, vast profits, and billions in shares for directors. It is absolutely crazy.
All this is not about pensions and small shareholders in Newcastle and the north-east. It is about greed by private companies and monopolies in taking over industries that have cash flow and profits.

Mr. Tim Devlin: I want to make a couple of points about the Trafalgar House bid for Northern Electric which have not been mentioned in the debate but which merit examination. Trafalgar House is a very large company which has a number of large companies within it based in my constituency. It is majority owned by British institutions. It owns Cleveland Bridge, Cleveland Structural, Davy Offshore, Davy Engineering and Trafalgar House Offshore. It has maintained its subsidiary headquarters in the north of England.
I hold no brief for Trafalgar House or for Northern Electric. However, Northern Electric has, to its credit, brought down the price of electricity, imposed a pay freeze for the past three years and reduced its prices to large consumers in real terms since privatisation.
In this debate, Labour is caught on the horns of a dilemma. It waxes on about high pay and the supposed deficiencies of privatised electricity companies, but it now wants to save some of them from the rigours of the market economy. On the radio last week the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) told us:
It's our money and we want it back.
What does that mean? As we have heard from the hon. Members for Tyne Bridge (Mr. Clelland) and for Blyth Valley (Mr. Campbell), it means nationalisation. But that is not official Labour policy.
Labour's policy is, apparently, to restore state control by the back door by giving the regulator greater powers to intervene. In the weeks and months ahead, as we head for the general election, I look forward to exposing the truth about the Labour party's position. Labour has a hidden agenda to renationalise many companies, but it will not tell anyone in case it does not get elected because of it.

Mr. Martin O'Neill: I start by responding to the point made by the hon. Member for Stockton, South (Mr. Devlin) and I refer to a briefing that Trafalgar House made available this evening, on ownership of the regional electricity companies. It makes the point that neither the Government nor the Opposition are opposed to a change of ownership of the regional electricity companies in principle. The point is that we are not here this evening to renationalise those companies. We are concerned about the position, among others, of the regional stakeholders who have invested money in companies across the country.
Many of us were in the House when we first dealt with the privatisation of the electricity companies. We heard at that time that it was to be an extension into the regions of popular capitalism and that it was to be an opportunity for ordinary people to get a share in major utilities in their area. The fact is that the utilities are not like international conglomerates; they are different in character and in function. They are subject to different disciplines, depending on the nature of the market.
It was significant that the President of the Board of Trade seemed to think that any company that had been at some stage in public ownership was a public utility for the purposes of this debate. As far as we arc concerned, a company that has responsibility for providing gas, water


or electricity—the fundamentals of a civilised life in our society—has to be the subject of regulation and has to be the subject of special and different forms of control.
The President of the Board of Trade has refused to intervene in a bid for a regional electricity company and we must look at the reasons why. It could be suggested that the right hon. Gentleman is merely bowing to one of the major paymasters of the Tory party. It could be that he is ignoring the deep anxieties about the behaviour of the Swiss Bank Corporation, or it could he simply that he is turning his back on the small shareholders and favouring his friends in the City. Those criticisms are commonplace when dealing with takeovers of any kind.
Some of us in the House remember the same criticisms and the same concerns being voiced at the time of the Guinness bid for Distillers. We were told then that the headquarters of Guinness were to be located in Scotland. We were told then that it would be a major international company operating out of Scotland. Virtually within days of the bid being agreed, all those undertakings were reneged on. The now discredited owners and leaders of Guinness turned on their heels and left Scotland behind them. It is against that background that we judge tonight's speeches on the takeover.
We are dealing with a private energy utility, which has at least three more years of monopoly franchise to run. Indeed, it is quite likely that that franchise will run for longer. The regulator has already stated that he has no idea how long it will be before the metering technology is available to enable competition in the regions in the electricity market. At present, there is not the means whereby domestic consumers' electricity consumption can be metered from more than one source. So it is quite possible that the three years of monopoly under the franchise will be extended for a much longer period.
It is certainly clear that with such a monopoly and the lax price controls that the regulator put in place last year—if anyone doubts the laxity of the controls, he need only remember the reaction of the market to the distribution price review, when the prices of shares rocketed because of the relief that the regulator was going to give the industry an easy time—Northern Electric can look to increasing its debt ratio to a figure in the region of 225 per cent. by March next year, if the bid is successful. It will take another four years after that before its debt ratio comes down to about 100 per cent.
Indeed, the Financial Times is right to say in its editorial today:
As stable, cash generative businesses, the Recs ought to carry high proportions of debt".
They should be capable of carrying such debt because they have the guarantee of income and the guarantee of a market for some considerable time to come.
It is not surprising that, having become so cash rich, Northern Electric should feel so relaxed about throwing money at its shareholders to defend itself. After the privatisation of the regional electricity companies at an artificially low price, and after they have been allowed to be regulated by the most feeble poacher-cum-gamekeeper, it is not surprising that so much interest is now being taken in them.
Perhaps it is not right to attack the director general personally, but it has to be said that he seems somewhat lax to choose, in the middle of a major industrial crisis of

the kind that seems to be currently taking place, to go on his holidays. It certainly suggests that he has not quite got his eye on the ball.
One can understand the frustration of Trafalgar House at the regulator's suggestion that it should separate its activities so that he can regulate them more effectively. The regulator maintains that that separation could be achieved either by a re-flotation of some 25 per cent. of Trafalgar House's electricity business, at a cost of between £100 million and £150 million, or simply by changing the original operating licence. If a re-flotation is unacceptable to Trafalgar House, is a change in licence acceptable to Northern Electric? After all, the power to amend electricity licences arises only after a report on the merger has been laid before Parliament and when both parties are subjected to the regime of the Electricity Act 1989. I believe that Trafalgar House is not subject to the Electricity Act regime at present. Perhaps the Minister will confirm that in his winding-up speech.
As we understand it, if Northern Electric is not prepared to have the licence changed, there is no reason why the licence should be changed. If the licence change was not available, Trafalgar House, even if it were successful in its bid, would not be able to sell electricity under the terms of the Electricity Act. Therefore, there is almost a power of veto in the hands of Northern Electric.
The licence modifications have already been referred to in the debate. Indeed, one of the few useful parts of the President of the Board of Trade's speech was when he came down to earth and addressed the status of the guarantees. He made it perfectly clear that the guarantees to be given by Trafalgar House to the regulator were meaningless because they had no force in law. The right hon. Gentleman said that if the regulator was not satisfied, he, the President of the Board of Trade, would be powerless if the regulator sought to refer the bid to the Monopolies and Mergers Commission.
The President said that, at the end of the day, he has to decide whether to accept the MMC report. However, the report may take a considerable time to produce and it may sufficiently frighten off potential predators for other regional electricity companies and make things that much more untidy and difficult for the people concerned.
I refer to the behaviour of Trafalgar House and its supporters last week at the meeting to which reference has been made. I am glad that the President has returned to the Chamber. He did not seem to appreciate that, when he was in purdah, or in opposition, writing books or having books written for him, telling us how he was going to intervene in industry, when the privatisation went through, the companies were organised on a regional basis precisely to attract the small shareholders into those companies.
When meetings are held to consult those people, it cannot be unreasonable for those voices to be heard, especially when at least one of the participants in the casting of the block vote, because that is what the institutions were doing—the Swiss Bank Corporation—is still under investigation for insider dealing. I am led to believe that an appeal to the takeover panel's ruling could still be made by Northern Electric and Warburg.
It is not just the shareholders and the bankers who are important. We must also consider the work force and the customers. In recent weeks we have heard a great deal about highly motivated men who have been richly rewarded by grateful shareholders. We all know about the


massive pay-outs awarded to directors and senior executives who, it can be argued, were simply being recompensed for paying off others.
After all, the so-called savings that have been achieved have not been as a result of massive capital investment, because there has been little of that at this stage. They have not been achieved as a result of an imaginative or original pricing policy, because it was dictated by a regulator who seemed to be more concerned with inflating share prices than with cutting electricity bills.
Those so-called savings have been achieved because of lower transmission costs and falls in the international price of coal and gas, through subsidised nuclear power and, most of all, as a result of the paying off of massive numbers of staff. One of the major attractions of Northern Electric to Trafalgar House is that its staffing cuts have been only about 15 per cent., which is only half Eastern Electricity's figure—it has cut 30 per cent. of its staff—and three quarters of that of Midlands Electricity, which has cut 20 per cent. Of the 12 RECs, five have cut more staff than Northern Electric.
It is little wonder that the workers of Northern Electric are looking anxiously at the intentions of both parties as their jobs will have to be sacrificed, as will future price cuts and investment, to pay for the takeover battle.

Mr. Caborn: Does my hon. Friend agree that not to allow the stock exchange's investigation to be concluded when the Swiss Bank Corporation took 8.5 per cent., at £135 million, in Yorkshire Electricity alone and Yorkshire Electricity had to have a search in companies legislation because the investment was supposed to be market-making, is totally out of sync with anything that has ever happened before on the stock exchange? Is it acceptable to allow the takeover to take place? Are the genuine shareholders being protected?

Mr. O'Neill: The activities of the Swiss Bank Corporation should be investigated further, if only because it seems to be a very easy and convenient arrangement whereby it is consulted by Trafalgar House and, before anything else happened, it acquired a substantial shareholding in the company in respect of which it is supposed to be acting as an adviser in relation to the takeover. It all seems to be too convenient. If the Minister had considered that, he should have thought again about a reference.
The current board of Northern Electric is prepared to sacrifice any number of staff to save the board's skin. However, the responsibility of the House is to all the people of the north-east. It is not their fault that they will be the captive consumers of a monopoly electricity supplier for years to come.
If Trafalgar wins with a higher bid than that promised by Northern, there will be precious little money left for distribution of the national grid flotation funds, which will have to be used instead to reduce the gearing or, alternatively, to offset tax losses elsewhere in the financial black hole that is called the Trafalgar House accounts. That company may be able to run cheap discount food stores, but, judging by the experience of passengers on the QE2, when the December Atlantic sailing was made to look like Christmas on Elm street, it has a lot to learn about consumer relations. Its one test in relation to individual consumers in Britain was a disaster.
These matters will not he decided by debates in the House. We shall not receive proper answers from Ministers—we have discovered that tonight. We need the cool assessment of the Monopolies and Mergers Commission.
When energy was privatised, many Opposition Members feared that a great many risks were being taken. Some of those fears have been proven to be exaggerated—we must admit that. There have been complaints about regional electricity companies. My hon. Friend the Member for Huddersfield (Mr. Sheerman) made the point—if the President of the Board of Trade had been present, he would have heard it—that many of our past concerns have diminished. In terms of the accounts and the complaints side of things, matters have become better. However, other fears relating to price, certain aspects of customer satisfaction, the protection of small shareholders' rights, future employment guarantees and management profiteering have still to be resolved. Most of them will require a change of government.
What is required now is reference to the MMC of this, the first, but not the last, bid for a regional electricity company. Such companies will he monopolies for years to come. The shareholdings represent the major savings of many people of modest means. They have provided well-paid and, until now, safe jobs for many people in areas of high unemployment. RECs have responsibility to keep people warm and safe in their homes at reasonable costs. Utilities controlled by small groups of largely unaccountable people deserve better treatment and protection than a brush-off from an indifferent Government. For all those reasons, we call on hon. Members who believe that there are public issues that can be considered only by the Monopolies and Mergers Commission to join us in the Lobby tonight.

The Minister for Energy and Industry (Mr. Tim Eggar): The hon. Member for Clackmannan (Mr. O'Neill) has a reputation for being a moderate—a man of the centre road within the Labour party, always waiting to smell the wind, and always waiting to keep just the right side of it. It was interesting to hear what he said. He detests shareholders. He is not prepared, nor is the Labour party, to allow individual shareholders and institutional shareholders to make up their minds and to make their decisions about whether to accept the hid by Trafalgar House. Not a bit of it.
The hon. Gentleman is not interested in protecting the interests of the many hundreds of thousands of pensioners, both present and future, who will have the right to make decisions based on their investment, which has been made on their behalf. He is not willing to trust the judgment of individual shareholders of Northern Electric and elsewhere. Opposition Members do not understand the free market system or how free enterprise works. [Interruption.] Opposition Members revert instinctively to central planning. [Interruption.]
I am not surprised that we have some interruptions from the hon. Member for Blyth Valley (Mr. Campbell). He is deeply uneasy about what his Front-Bench colleagues say. He thinks that the hon. Member for Clackmannan is too moderate. It would he very interesting to take a straw poll. Based on the contributions of Opposition Front-Bench Members, what would north-eastern Members really think about the future of the electricity industry in their area? I


shall tell the House. It was clear that the hon. Member for Blyth Valley (Mr. Campbell) wanted renationalisation, as did the hon. Member for Tyne Bridge (Mr. Clelland) who was honest and came out with it immediately.

Mr. Ronnie Campbell: rose—

Mr. Deputy Speaker: Order. The hon. Gentleman must control himself.

Mr. Eggar: It took a good honest Yorkshireman to stand up for Yorkshire. The hon. Member for Huddersfield (Mr. Sheerman) yelled out the benefits of Yorkshire Electricity, and pointed to the major contributions it has been making throughout the region. The hon. Gentleman defended privatisation, and the hon. Member for Clackmannan (Mr. O'Neill) agreed. The hon. Gentleman said that there might be one or two things right about privatisation. He admitted that privatisation works.
One of the great pleasures I have had since the general election has been my frequent visits to the north-east, because I looked after the north-east for the Department of Trade and Industry until July. I admire and respect the sense of community and belief which goes deep in the north-east. There is a deep-rooted belief, shared by local Members of Parliament, that whatever is local is good, and that the status quo has to be defended at any cost.
If the status quo happens to be a nationalised regional distribution board for electricity, it must be defended. [Interruption.] Nobody fought privatisation harder than the hon. Member for Blyth Valley, or the other north-east Members. But now we have a privatised regional company, and what do they do? They rush to defence what is local. They defend the status quo.
Those hon. Members do not use as a defence the argument deployed by my hon. Friends, that prices have come down and that standards of service have improved—not a bit of it. Their defence is simple. It is a north-east company, and it must be defended whatever its rights or wrongs. Northern Electric is worth defending because it is there, but those hon. Members forget that Trafalgar House is also a major company in the north-east.
My hon. Friend the Member for Stockton, South (Mr. Devlin) pointed out the number of companies which the firm owns in the north-east, and I believe that Trafalgar House employs almost as many—if not more—people in the north-east than Northern Electricity.

Mr. Devlin: More.

Mr. Eggar: I am sorry. I did not pick that up.

Ms Armstrong: Will the Minister confirm that the taxpayer—with whom we are supposed to be concerned—is likely to lose about £270 million if the deal goes through?

Mr. Eggar: Of all the points which I thought the scarlet lady might bring up, nothing could surprise me more than that. The new, modern Labour party is worried about the taxpayer. It might have been worried about the customer. That is the first time that the hon. Lady has mentioned the taxpayer.
What the Leader of the Opposition said about privatisation is really interesting, because he was the Opposition spokesman when electricity was privatised.

The right hon. Gentleman said that there would he a dramatic upward pressure on prices when electricity was privatised. He was wrong and, what is more, the hon. Member for Clackmannan admitted that he was wrong. Opposition Members said much about the share options issue, and I thought that the great new leader of the Labour party was bound to have made a lot about the share options issue when he lead the Opposition on electricity. I read through Hansard, but I could find no evidence at all that the right hon. Gentleman had ever referred to share options.
I thought that my eyes might have misled me so I arranged for the new marvel, the parliamentary on-line information service, to be interrogated. We fed in the word "Blair". We added "electricity" and "share options". We gave all the relevant dates. What came back? A big round zero. In all the time that the right hon. Member for Sedgefield (Mr. Blair) led on electricity for the Opposition, he never raised the issue of share options. He has the nerve to mention the golden share in his motion. Much mention has been made of share options.
Certain myths persist. When the right hon. Member for Sedgefield opposed privatisation, he said that there would be no competition between the regional electricity companies. He was wrong. Already more than half the competitive market—the over-100 kW market—is provided by companies other than the local regional electricity company. There is already extensive competition. As even the hon. Member for Clackmannan admitted, there will be full competition for domestic consumers in 1998.
The debate has not been about regulation in the electricity sector. It has been about something much more fundamental. It has been about the real priorities of the Labour party. It has been about the dispute between the hon. Members for Blyth Valley, for Tyne Bridge and for Huddersfield. It has all been about clause IV and what the Opposition will do in the future about regional electricity companies.
You might not be a regular reader of the News of the World, Mr. Deputy Speaker, but I can recommend it to you and to all Opposition Members. There is an interesting contribution to it. The hon. Member for Jarrow (Mr. Dixon) said something which I recommend that all Opposition Members should take account of. He said:
The last thing we want … is to start contemplating our navels with this unnecessary debate. I don't think Clause 4 should be changed.
That is not—

Mr. Deputy Speaker: Order. I cannot see what clause IV has to do with the debate. Stick to the debate.

Mr. Eggar: But, Mr. Deputy Speaker, the debate is entitled
Future ownership, control and regulation of regional electricity companies".
If the debate is not about whether the Opposition want to renationalise the regional electricity companies and the policies that they want to introduce, what on earth is it about?
I have a word of advice for the hon. Member for Blyth Valley. When he wants to get off early in the evening one day during the week, he should not look to mosey up close to the right hon. Member for Bishop Auckland (Mr. Foster). He should go along the corridor a little further


and talk to the hon. Member for Jarrow. I am sure that he will oblige. I do not think that the hon. Member for Huddersfield will be so lucky. The hon. Member for Jarrow will read his speech in the debate this evening. The hon. Member for Huddersfield will be here throughout the night and probably the next day.
We cannot get away from the fact that, despite the new label, the Labour party is a socialist party. Whenever Labour Members are confronted with a difficult issue and have to make a difficult policy choice, what do they do? They rush for central control. They really believe that the man in Whitehall knows best and that the heyday of the socialist party was the day of maximum nationalisation—

Mr. Ronnie Campbell: rose—

Mr. Deputy Speaker: Order. The hon. Member for Blyth Valley (Mr. Campbell) must stop bawling and control himself. I have already told him that. [Interruption.] Order.

Mr. Eggar: There we see it, Mr. Deputy Speaker. The hon. Member for Blyth Valley—

Question put, That the original words stand part of the Question:—

The House divided: Ayes 246, Noes 280.

Division No. 78]
[10.00 pm


AYES


Abbott, Ms Diane
Coffey, Ann


Adams, Mrs Irene
Connarty, Michael


Ainger, Nick
Cook, Robin (Livingston)


Ainsworth, Robert (Cov'try NE)
Corbett, Robin


Armstrong, Hilary
Corbyn, Jeremy


Ashton, Joe
Cousins, Jim


Austin-Walker, John
Cox, Tom


Banks, Tony (Newham NW)
Cummings, John


Barnes, Harry
Cunliffe, Lawrence


Barron, Kevin
Cunningham, Jim (Covy SE)


Battle, John
Cunningham, Rt Hon Dr John


Beckett, Rt Hon Margaret
Dalyell, Tam


Beith, Rt Hon A J
Darling, Alistair


Bell, Stuart
Davidson, Ian


Benn, Rt Hon Tony
Davies, Bryan (Oldham C'tral)


Bennett, Andrew F
Davies, Ron (Caerphilly)


Benton, Joe
Davis, Terry (B'ham, H'dge H'l)


Bermingham, Gerald
Denham, John


Berry, Roger
Dewar, Donald


Betts, Clive
Dixon, Don


Blunkett, David
Dobson, Frank


Boateng, Paul
Donohoe, Brian H


Boyes, Roland
Dowd, Jim


Bradley, Keith
Dunnachie, Jimmy


Bray, Dr Jeremy
Eagle, Ms Angela


Brown, N (N'c'tle upon Tyne E)
Eastham, Ken


Burden, Richard
Enright, Derek


Byers, Stephen
Etherington, Bill


Caborn, Richard
Evans, John (St Helens N)


Callaghan, Jim
Ewing, Mrs Margaret


Campbell, Mrs Anne (C'bridge)
Fatchett, Derek


Campbell, Ronnie (Blyth V)
Field, Frank (Birkenhead)


Campbell-Savours, D N
Flynn, Paul


Caravan, Dennis
Foster, Rt Hon Derek


Cann, Jamie
Foster, Don (Bath)


Chidgey, David
Foulkes, George


Chisholm, Malcolm
Fraser, John


Church, Judith
Fyfe, Maria


Clapham, Michael
Galloway, George


Clarke, Eric (Midlothian)
Gerrard, Neil


Clarke, Tom (Monklands W)
Gilbert, Rt Hon Dr John


Clelland, David
Godman, Dr Norman A


Clwyd, Mrs Ann
Godsiff, Roger





Golding, Mrs Llin
Michie, Bill (Sheffield Heeley)


Gordon, Mildred
Michie, Mrs Ray (Argyll &amp; Bute)


Graham, Thomas
Milburn, Alan


Grant, Bernie (Tottenham)
Miller, Andrew


Griffiths, Nigel (Edinburgh S)
Mitchell, Austin (Gt Grimsby)


Griffiths, Win (Bridgend)
Moonie, Dr Lewis


Gunnell, John
Morgan, Rhodri


Hain, Peter
Morley, Elliot


Hall, Mike
Morris, Rt Hon Alfred (Wy'nshawe)


Hanson, David
Morris, Estelle (B'ham Yardley)


Harman, Ms Harriet
Morris, Rt Hon John (Aberavon)


Harvey, Nick
Mowlam, Marjorie


Henderson, Doug
Mullin, Chris


Heppell, John
Murphy, Paul


Hill, Keith (Streatham)
Oakes, Rt Hon Gordon


Hinchliffe, David
O'Brien, Mike (N W'kshire)


Hodge, Margaret
O'Brien, William (Normanton)


Hoey, Kate
O'Hara, Edward


Hogg, Norman (Cumbernauld)
Olner, Bill


Home Robertson, John
O'Neill, Martin


Hood, Jimmy
Orme, Rt Hon Stanley


Howarth, George (Knowsley North)
Parry, Robert


Hoyle, Doug
Patchett, Terry


Hughes, Kevin (Doncaster N)
Pearson, Ian


Hughes, Robert (Aberdeen N)
Pendry, Tom


Hughes, Roy (Newport E)
Pickthall, Colin


Hughes, Simon (Southwark)
Pike, Peter L


Hutton, John
Powell, Ray (Ogmore)


Illsley, Eric
Prentice, Bridget (Lew'm E)


Jackson, Glenda (H'stead)
Prentice, Gordon (Pendle)


Jackson, Helen (Shef'ld, H)
Prescott, Rt Hon John


Jamieson, David
Primarolo, Dawn


Janner, Greville
Purchase, Ken


Johnston, Sir Russell
Quin, Ms Joyce


Jones, Barry (Alyn and D'side)
Radice, Giles


Jones, Ieuan Wyn (Ynys Mon)
Randall, Stuart


Jones, Jon Owen (Cardiff C)
Raynsford, Nick


Jones, Lynne (B'ham S O)
Redmond, Martin


Jones, Martyn (Clwyd, SW)
Reid, Dr John


Jowell, Tessa
Rendel, David


Kaufman, Rt Hon Gerald
Robertson, George (Hamilton)


Keen, Alan
Robinson, Geoffrey (Co'try NW)


Kennedy, Jane (Lpool Brdgn)
Rogers, Allan


Khabra, Piara S
Rooker, Jeff


Kilfoyle, Peter
Rooney, Terry


Lewis, Terry
Ross, Ernie (Dundee W)


Liddell, Mrs Helen
Rowlands, Ted


Litherland, Robert
Ruddock, Joan


Livingstone, Ken
Sedgemore, Brian


Lloyd, Tony (Stretford)
Sheerman, Barry


Llwyd, Elfyn
Shore, Rt Hon Peter


Loyden, Eddie
Short, Clare


Lynne, Ms Liz
Simpson, Alan


McAllion, John
Skinner, Dennis


McAvoy, Thomas
Smith, Andrew (Oxford E)


McCartney, Ian
Smith, Llew (Blaenau Gwent)


Macdonald, Calum
Snape, Peter


McFall, John
Soley, Clive


McKelvey, William
Spearing, Nigel


Mackinlay, Andrew
Spellar, John


Maclennan, Robert
Steinberg, Gerry


McMaster, Gordon
Stevenson, George


McNamara, Kevin
Stott, Roger


MacShane, Denis
Strang, Dr. Gavin


McWilliam, John
Straw, Jack


Madden, Max
Sutcliffe, Gerry


Maddock, Diana
Taylor, Mrs Ann (Dewsbury)


Mahon, Alice
Timms, Stephen


Marek, Dr John
Tipping, Paddy


Marshall, David (Shettleston)
Turner, Dennis


Marshall, Jim (Leicester, S)
Vaz, Keith


Martin, Michael J (Springburn)
Walker, Rt Hon Sir Harold


Martlew, Eric
Wallace, James


Meacher, Michael
Wardell, Gareth (Gower)


Meale, Alan
Wareing, Robert N


Michael, Alun
Watson, Mike






Welsh, Andrew
Wray, Jimmy


Wicks, Malcolm
Wright, Dr Tony


Williams, Rt Hon Alan (Sw'n W)



Williams, Alan W (Carmarthen)
Tellers for the Ayes:


Wise, Audrey
Mrs. Barbara Roche and Mr. George Mudie.


Worthington, Tony





NOES


Ainsworth, Peter (East Surrey)
Dover, Den


Aitken, Rt Hon Jonathan
Duncan, Alan


Alexander, Richard
Duncan-Smith, Iain


Alison, Rt Hon Michael (Selby)
Dunn, Bob


Allason, Rupert (Torbay)
Durant, Sir Anthony


Ancram, Michael
Dykes, Hugh


Arbuthnot, James
Eggar, Rt Hon Tim


Arnold, Jacques (Gravesham)
Elletson, Harold


Arnold, Sir Thomas (Hazel Grv)
Emery, Rt Hon Sir Peter


Ashby, David
Evans, David (Welwyn Hatfield)


Atkins, Robert
Evans, Jonathan (Brecon)


Atkinson, David (Bour'mouth E)
Evans, Roger (Monmouth)


Atkinson, Peter (Hexham)
Evennett, David


Baker, Rt Hon Kenneth (Mole V)
Faber, David


Baker, Nicholas (North Dorset)
Fabricant, Michael


Baldry, Tony
Field, Barry (Isle of Wight)


Banks, Matthew (Southport)
Fishburn, Dudley


Bates, Michael
Forman, Nigel


Batiste, Spencer
Forsyth, Rt Hon Michael (Stirling)


Bellingham, Henry
Fowler, Rt Hon Sir Norman


Bendall, Vivian
Fox, Sir Marcus (Shipley)


Beresford, Sir Paul
Freeman, Rt Hon Roger


Biffen, Rt Hon John
French, Douglas


Bonsor, Sir Nicholas
Fry, Sir Peter


Booth, Hartley
Gale, Roger


Boswell, Tim
Gallie, Phil


Bottomley, Peter (Eltham)
Gardiner, Sir George


Bottomley, Rt Hon Virginia
Garnier, Edward


Bowden, Sir Andrew
Gill, Christopher


Bowis, John
Goodlad, Rt Hon Alastair


Boyson, Rt Hon Sir Rhodes
Goodson-Wickes, Dr Charles


Brandreth, Gyles
Gorman, Mrs Teresa


Brazier, Julian
Gorst, Sir John


Bright, Sir Graham
Grant, Sir A (SW Cambs)


Brooke, Rt Hon Peter
Greenway, Harry (Ealing N)


Brown, M (Brigg &amp; Cl'thorpes)
Greenway, John (Ryedale)


Browning, Mrs Angela
Griffiths, Peter (Portsmouth, N)


Bruce, Ian (Dorset)
Grylls, Sir Michael


Budgen, Nicholas
Gummer, Rt Hon John Selwyn


Burns, Simon
Hague, William


Burt, Alistair
Hamilton, Rt Hon Sir Archibald


Butler, Peter
Hamilton, Neil (Tatton)


Butterfill, John
Hampson, Dr Keith


Carlisle, John (Luton North)
Hanley, Rt Hon Jeremy


Carlisle, Sir Kenneth (Lincoln)
Hannam, Sir John


Carrington, Matthew
Harris, David


Carttiss, Michael
Haselhurst, Alan


Cash, William
Hawkins, Nick


Channon, Rt Hon Paul
Hawksley, Warren


Clappison, James
Hayes, Jerry


Clark, Dr Michael (Rochford)
Heald, Oliver


Clarke, Rt Hon Kenneth (Ru'clif)
Heath, Rt Hon Sir Edward


Clifton-Brown, Geoffrey
Heathcoat-Amory, David


Colvin, Michael
Hendry, Charles


Congdon, David
Heseltine, Rt Hon Michael


Coombs, Simon (Swindon)
Higgins, Rt Hon Sir Terence


Cope, Rt Hon Sir John
Hill, James (Southampton Test)


Cormack, Sir Patrick
Hogg, Rt Hon Douglas (G'tham)


Couchman, James
Horam, John


Cran, James
Hordern, Rt Hon Sir Peter


Currie, Mrs Edwina (S D'by'ire)
Howard, Rt Hon Michael


Curry, David (Skipton &amp; Ripon)
Howarth, Alan (Strat'rd-on-A)


Davies, Quentin (Stamford)
Howell, Rt Hon David (G'dford)


Day, Stephen
Howell, Sir Ralph (N Norfolk)


Deva, Nirj Joseph
Hughes, Robert G (Harrow W)


Devlin, Tim
Hunt, Rt Hon David (Wirral W)


Dicks, Terry
Hunt, Sir John (Ravensbourne)


Douglas-Hamilton, Lord James
Hunter, Andrew





Hurd, Rt Hon Douglas
Patten, Rt Hon John


Jack, Michael
Pawsey, James


Jenkin, Bernard
Peacock, Mrs Elizabeth



Pickles, Eric


Jessel, Toby
Porter, Barry (Wirral S)


Jones, Gwilym (Cardiff N)
Porter, David (Waveney)


Jones, Robert B (W Hertfdshr)
Portillo, Rt Hon Michael


Kellett-Bowman, Dame Elaine
Powell, William (Corby)


Key, Robert
Redwood, Rt Hon John



Renton, Rt Hon Tim


King, Rt Hon Tom
Richards, Rod


Kirkhope, Timothy
Riddick, Graham


Knight, Mrs Angela (Erewash)
Rifkind, Rt Hon Malcolm


Knight, Dame Jill (Bir'm E'st'n)
Robathan, Andrew


Knox, Sir David
Robertson, Raymond (Ab'd'n S)


Kynoch, George (Kincardine)
Robinson, Mark (Somerton)



Roe, Mrs Marion (Broxbourne)


Lait, Mrs Jacqui
Rowe, Andrew (Mid Kent)


Lang, Rt Hon Ian
Rumbold, Rt Hon Dame Angela


Lawrence, Sir Ivan
Ryder, Rt Hon Richard


Legg, Barry
Sackville, Tom


Leigh, Edward
Sainsbury, Rt Hon Sir Timothy



Scott, Rt Hon Sir Nicholas


Lennox-Boyd, Sir Mark
Shaw, David (Dover)


Lidington, David
Shaw, Sir Giles (Pudsey)


Lightbown, David
Shephard, Rt Hon Gillian


Lilley, Rt Hon Peter
Shepherd, Colin (Hereford)


Lloyd, Rt Hon Sir Peter (Fareham)
Shepherd, Richard (Aldridge)



Shersby, Michael


Lord, Michael
Sims, Roger


Lyell, Rt Hon Sir Nicholas
Skeet, Sir Trevor


MacGregor, Rt Hon John
Smith, Tim (Beaconsfield)


MacKay, Andrew
Soames, Nicholas


Maclean, David
Speed, Sir Keith



Spicer, Sir James (W Dorset)


McNair-Wilson, Sir Patrick
Spicer, Michael (S Worcs)


Madel, Sir David
Spink, Dr Robert


Maitland, Lady Olga
Spring, Richard


Malone, Gerald
Sproat, Iain


Mans, Keith
Squire, Robin (Hornchurch)



Stanley, Rt Hon Sir John


Marland, Paul
Steen, Anthony


Marshall, John (Hendon S)
Stern, Michael


Marshall, Sir Michael (Arundel)
Stewart, Allan


Martin, David (Portsmouth S)
Streeter, Gary


Mates, Michael
Sumberg, David



Sweeney, Walter


Mawhinney, Rt Hon Dr Brian
Sykes, John


Mayhew, Rt Hon Sir Patrick
Tapsell, Sir Peter


Mellor, Rt Hon David
Taylor, John M (Solihull)


Merchant, Piers
Taylor, Sir Teddy (Southend, E)


Mills, Iain
Temple-Morris, Peter



Thomason, Roy


Mitchell, Andrew (Gedling)
Thompson, Patrick (Norwich N)


Mitchell, Sir David (NW Hants)
Thornton, Sir Malcolm


Moate, Sir Roger
Thurnham, Peter


Monro, Sir Hector
Townend, John (Bridlington)



Townsend, Cyril D (Bexl'yh'th)


Montgomery, Sir Fergus
Tracey, Richard


Nelson, Anthony
Tredinnick, David


Neubert, Sir Michael
Trend, Michael


Newton, Rt Hon Tony
Twinn, Dr Ian


Nicholls, Patrick
Vaughan, Sir Gerard



Walden, George


Nicholson, David (Taunton)
Walker, Bill (N Tayside)


Nicholson, Emma (Devon West)
Waller, Gary


Norris, Steve
Ward, John


Onslow, Rt Hon Sir Cranley
Wardle, Charles (Bexhill)


Oppenheim, Phillip
Waterson, Nigel


Ottaway, Richard
Watts, John



Wells, Bowen


Page, Richard
Whitney, Ray


Paice, James
Widdecombe, Ann


Patnick, Sir Irvine
Wiggin, Sir Jerry






Willetts, David
Yeo, Tim


Wilshire, David
Young, Rt Hon Sir George


Winterton, Mrs Ann (Congleton)



Winterton, Nicholas (Macc'f'ld)
Tellers for the Noes:


Wolfson, Mark
Mr. Sydney Chapman and Mr. Derek Conway.


Wood, Timothy

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments):—

The House divided: Ayes 275, Noes 247.

Division No. 79]
[10.15 pm


AYES


Ainsworth, Peter (East Surrey)
Cormack, Sir Patrick


Aitken, Rt Hon Jonathan
Couchman, James


Alexander, Richard
Cran, James


Alison, Rt Hon Michael (Selby)
Currie, Mrs Edwina (S D'by'ire)


Allason, Rupert (Torbay)
Curry, David (Skipton &amp; Ripon)


Ancram, Michael
Davies, Quentin (Stamford)


Arbuthnot, James
Day, Stephen


Arnold, Jacques (Gravesham)
Deva, Nirj Joseph


Arnold, Sir Thomas (Hazel Grv)
Devlin, Tim


Ashby, David
Dicks, Terry


Atkins, Robert
Douglas-Hamilton, Lord James


Atkinson, David (Bour'mouth E)
Dover, Den


Atkinson, Peter (Hexham)
Duncan, Alan


Baker, Rt Hon Kenneth (Mole V)
Duncan-Smith, Iain


Baker, Nicholas (North Dorset)
Dunn, Bob


Baldry, Tony
Durant, Sir Anthony


Banks, Matthew (Southport)
Dykes, Hugh


Bates, Michael
Eggar, Rt Hon Tim


Batiste, Spencer
Elletson, Harold


Bellingham, Henry
Emery, Rt Hon Sir Peter


Bendall, Vivian
Evans, David (Welwyn Hatfield)


Beresford, Sir Paul
Evans, Jonathan (Brecon)


Biffen, Rt Hon John
Evans, Roger (Monmouth)


Bonsor, Sir Nicholas
Evennett, David


Booth, Hartley
Faber, David


Boswell, Tim
Fabricant, Michael


Bottomley, Rt Hon Virginia
Field, Barry (Isle of Wight)


Bowden, Sir Andrew
Fishburn, Dudley


Bowis, John
Forman, Nigel


Boyson, Rt Hon Sir Rhodes
Forsyth, Rt Hon Michael (Stirling)


Brandreth, Gyles
Fox, Sir Marcus (Shipley)


Brazier, Julian
Freeman, Rt Hon Roger


Bright, Sir Graham
French, Douglas


Brooke, Rt Hon Peter
Fry, Sir Peter


Brown, M (Brigg &amp; Cl'thorpes)
Gale, Roger


Browning, Mrs Angela
Gallie, Phil


Bruce, Ian (Dorset)
Gardiner, Sir George


Budgen, Nicholas
Garnier, Edward


Burns, Simon
Gill, Christopher


Burt, Alistair
Goodlad, Rt Hon Alastair


Butler, Peter
Goodson-Wickes, Dr Charles


Butterfill, John
Gorman, Mrs Teresa


Carlisle, John (Luton North)
Gorst, Sir John


Carlisle, Sir Kenneth (Lincoln)
Grant, Sir A (SW Cambs)


Carrington, Matthew
Greenway, Harry (Ealing N)


Carttiss, Michael
Greenway, John (Ryedale)


Cash, William
Griffiths, Peter (Portsmouth, N)


Channon, Rt Hon Paul
Grylls, Sir Michael


Chapman, Sydney
Gummer, Rt Hon John Selwyn


Clappison, James
Hague, William


Clark, Dr Michael (Rochford)
Hamilton, Rt Hon Sir Archibald


Clarke, Rt Hon Kenneth (Ru'clif)
Hamilton, Neil (Tatton)


Clifton-Brown, Geoffrey
Hampson, Dr Keith


Colvin, Michael
Hanley, Rt Hon Jeremy


Congdon, David
Hannam, Sir John


Conway, Derek
Harris, David


Coombs, Simon (Swindon)
Haselhurst, Alan


Cope, Rt Hon Sir John
Hawkins, Nick





Hawksley, Warren
Oppenheim, Phillip


Hayes, Jerry
Ottaway, Richard


Heald, Oliver
Page, Richard


Heath, Rt Hon Sir Edward
Paice, James


Heathcoat-Amory, David
Patnick, Sir Irvine


Hendry, Charles
Patten, Rt Hon John


Heseltine, Rt Hon Michael
Pawsey, James


Higgins, Rt Hon Sir Terence
Peacock, Mrs Elizabeth


Hill, James (Southampton Test)
Pickles, Eric


Hogg, Rt Hon Douglas (G'tham)
Porter, Barry (Wirral S)


Horam, John
Porter, David (Waveney)


Hordern, Rt Hon Sir Peter
Portillo, Rt Hon Michael


Howard, Rt Hon Michael
Powell, William (Corby)


Howarth, Alan (Strat'rd-on-A)
Redwood, Rt Hon John


Howell, Rt Hon David (G'dford)
Renton, Rt Hon Tim


Howel, Sir Ralph (N Norfolk)
Richards, Rod


Hughes, Robert G (Harrow W)
Riddick, Graham


Hunt, Rt Hon David (Wirral W)
Rifkind, Rt Hon Malcolm


Hunt, Sir John (Ravensbourne)
Robathan, Andrew


Hunter, Andrew
Robertson, Raymond (Ab'd'n S)


Jack, Michael
Robinson, Mark (Somerton)


Jenkin, Bernard
Roe, Mrs Marion (Broxbourne)


Jessel, Toby
Rowe, Andrew (Mid Kent)


Jones, Gwilym (Cardiff N)
Rumbold, Rt Hon Dame Angela


Jones, Robert B (W Hertfdshr)
Ryder, Rt Hon Richard


Kellett-Bowman, Dame Elaine
Sackville, Tom


Key, Robert
Sainsbury, Rt Hon Sir Timothy


King, Rt Hon Tom
Scott, Rt Hon Sir Nicholas


Knight, Mrs Angela (Erewash)
Shaw, David (Dover)


Knight, Dame Jill (Bir'm E'st'n)
Shaw, Sir Giles (Pudsey)


Knox, Sir David
Shephard, Rt Hon Gillian


Kynoch, George (Kincardine)
Shepherd, Colin (Hereford)


Lait, Mrs Jacqui
Shepherd, Richard (Aldridge)


Lang, Rt Hon Ian
Shersby, Michael


Lawrence, Sir Ivan
Sims, Roger


Legg, Barry
Skeet, Sir Trevor


Leigh, Edward
Smith, Tim (Beaconsfield)


Lennox-Boyd, Sir Mark
Soames, Nicholas


Lidington, David
Speed, Sir Keith


Lightbown, David
Spicer, Sir James (W Dorset)


Lilley, Rt Hon Peter
Spicer, Michael (S Worcs)


Lloyd, Rt Hon Sir Peter (Fareham)
Spink, Dr Robert


Lord, Michael
Spring, Richard


Lyell, Rt Hon Sir Nicholas
Sproat, Iain


MacGregor, Rt Hon John
Squire, Robin (Hornchurch)


MacKay, Andrew
Stanley, Rt Hon Sir John


Maclean, David
Steen, Anthony


McNair-Wilson, Sir Patrick
Stern, Michael


Madel, Sir David
Stewart, Allan


Maitland, Lady Olga
Streeter, Gary


Malone, Gerald
Sumberg, David


Mans, Keith
Sykes, John


Marland, Paul
Tapsell, Sir Peter


Marshall, John (Hendon S)
Taylor, John M (Solihull)


Marshall, Sir Michael (Arundel)
Taylor, Sir Teddy (Southend, E)


Martin, David (Portsmouth S)
Temple-Morris, Peter


Mates, Michael
Thomason, Roy


Mawhinney, Rt Hon Dr Brian
Thompson, Patrick (Norwich N)


Mayhew, Rt Hon Sir Patrick
Thornton, Sir Malcolm


Mellor, Rt Hon David
Thurnham, Peter


Merchant, Piers
Townend, John (Bridlington)


Mills, Iain
Townsend, Cyril D (Bexl'yh'th)


Mitchell, Andrew (Gedling)
Tracey, Richard


Mitchell, Sir David (NW Hants)
Tredinnick, David


Moate, Sir Roger
Trend, Michael


Monro, Sir Hector
Twinn, Dr Ian


Montgomery, Sir Fergus
Vaughan, Sir Gerard


Nelson, Anthony
Walden, George


Neubert, Sir Michael
Walker, Bill (N Tayside)


Newton, Rt Hon Tony
Waller, Gary


Nicholls, Patrick
Ward, John


Nicholson, David (Taunton)
Wardle, Charles (Bexhill)


Norris, Steve
Waterson, Nigel


Onslow, Rt Hon Sir Cranley
Watts, John






Wells, Bowen
Winterton, Nicholas (Macc'f'ld)


Whitney, Ray
Wolfson, Mark


Widdecombe, Ann
Yeo, Tim


Wiggin, Sir Jerry
Young, Rt Hon Sir George


Willetts, David
Tellers for the Ayes:


Wilshire, David
Mr. Timothy Wood and Mr. Timothy Kirkhope.


Winterton, Mrs Ann (Congleton)





NOES


Abbott, Ms Diane
Dunnachie, Jimmy


Adams, Mrs Irene
Eagle, Ms Angela


Ainger, Nick
Eastham, Ken


Ainsworth, Robert (Cov'try NE)
Enright, Derek


Armstrong, Hilary
Etherington, Bill


Ashton, Joe
Evans, John (St Helens N)


Austin-Walker, John
Ewing, Mrs Margaret


Banks, Tony (Newham NW)
Fatchett, Derek


Barnes, Harry
Field, Frank (Birkenhead)


Barron, Kevin
Flynn, Paul


Battle, John
Foster, Rt Hon Derek


Beckett, Rt Hon Margaret
Foster, Don (Bath)


Beith,Rt Hon A J
Foulkes, George


Bell, Stuart
Fraser, John


Benn, Rt Hon Tony
Fyfe, Maria


Bennett, Andrew F
Galloway, George


Benton, Joe
Gerrard, Neil


Bermingham, Gerald
Gilbert, Rt Hon Dr John


Berry, Roger
Godman, Dr Norman A


Betts, Clive
Godsiff, Roger


Blunkett, David
Golding, Mrs Llin


Boateng, Paul
Gordon, Mildred


Boyes, Roland
Graham, Thomas


Bradley, Keith
Grant Bernie (Tottenham)


Bray, Dr Jeremy
Griffiths, Nigel (Edinburgh S)


Brown, N (N'c'tle upon Tyne E)
Griffiths, Win (Bridgend)


Burden, Richard
Gunnell, John


Byers, Stephen
Hain, Peter


Caborn, Richard
Hall, Mike


Callaghan, Jim
Hanson, David


Campbell, Mrs Anne (C'bridge)
Harman, Ms Harriet


Campbell, Ronnie (Blyth V)
Harvey, Nick


Campbell-Savours, D N
Henderson, Doug


Canavan, Dennis
Heppell, John


Cann, Jamie
Hill, Keith (Streatham)


Chidgey, David
Hinchliffe, David


Chisholm, Malcolm
Hodge, Margaret


Church, Judith
Hoey, Kate


Clapham, Michael
Hogg, Norman (Cumbernauld)


Clarke, Eric (Midlothian)
Home Robertson, John


Clarke, Tom (Monklands W)
Hood, Jimmy


Clelland, David
Howarth, George (Knowsley North)


Clwyd, Mrs Ann
Hoyle, Doug


Coffey, Ann
Hughes, Kevin (Doncaster N)


Connarty, Michael
Hughes, Robert (Aberdeen N)


Cook, Robin (Livingston)
Hughes, Roy (Newport E)


Corbett, Robin
Hughes, Simon (Southward)


Corbyn, Jeremy
Hutton, John


Cousins, Jim
Illsley, Eric


Cox, Tom
Jackson, Glenda (H'stead)


Cummings, John
Jackson, Helen (Shef'ld, H)


Cunliffe, Lawrence
Jamieson, David


Cunningham, Jim (Covy SE)
Janner, Greville


Cunningham, Rt Hon Dr John
Johnston, Sir Russell


Dalyell, Tam
Jones, Barry (Alyn and D'side)


Darling, Alistair
Jones, leuan Wyn (Ynys Mon)


Davidson, Ian
Jones, Jon Owen (Cardiff C)


Davies, Bryan (Oldham C'tral)
Jones, Lynne (B'ham S O)


Davies, Ron (Caerphilly)
Jones, Martyn (Clwyd, SW)


Davis, Terry (B'ham, H'dge H'l)
Jowell, Tessa


Denham, John
Kaufman, Rt Hon Gerald


Dewar, Donald
Keen, Alan


Dixon, Don
Kennedy, Jane (Lpool Brdgn)


Dobson, Frank
Khabra, Piara S


Donohoe, Brian H
Kilfoyle. Peter


Dowd, Jim
Lewis, Terry





Liddell, Mrs Helen
Prentice, Bridget (Lew'm E)


Litherland, Robert
Prentice, Gordon (Pendle)


Livingstone, Ken
Prescott, Rt Hon John


Lloyd, Tony (Stretford)
Primarolo, Dawn


Llwyd, Elfyn
Purchase, Ken


Loyden, Eddie
Quin, Ms Joyce


Lynne, Ms Liz
Radice, Giles


McAllion, John
Randal, Stuart


McAvoy, Thomas
Raynsford, Nick


McCartney, Ian
Redmond, Martin


Macdonald, Calum
Reid, Dr John


McFall, John
Rendel, David


McKelvey, William
Robertson, George (Hamilton)


Mackinlay, Andrew
Robinson, Geoffrey (Co'try NW)


Maclennan, Robert
Rogers, Allan


McMaster, Gordon
Rooker, Jeff


McNamara, Kevin
Rooney, Terry


MacShane, Denis
Ross, Ernie (Dundee W)


McWiliam, John
Rowlands, Ted


Madden, Max
Ruddock, Joan


Maddock, Diana
Sheerman, Barry


Mahon, Alice
Shore, Rt Hon Peter


Marek,Dr John
Short, Clare


Marshall, David (Shettleston)
Simpson, Alan


Marshall, Jim (Leicester, S)
Skinner, Dennis


Martin, Michael J (Springburn)
Smith, Andrew (Oxford E)


Martlew, Eric
Smith, Llew (Blaenau Gwent)


Maxton, John
Snape, Peter


Meacher, Michael
Soley, Clive


Meale, Alan
Spearing, Nigel


Michael, Alun
Spellar, John


Michie, Bill (Sheffield Heeley)
Steinberg, Gerry


Michie, Mrs Ray (Argyll &amp; Bute)
Stevenson, George


Milburn, Alan
Stott, Roger


Miller, Andrew
Strang, Dr. Gavin


Mitchell, Austin (Gt Grimsby)
Straw, Jack



Sutcliffe, Gerry


Moonie, Dr Lewis
Taylor, Mrs Ann (Dewsbury)


Morgan, Rhodri
Timms, Stephen


Morley, Elliot
Tipping, Paddy


Morris, Rt Hon Alfred (Wy'nshawe)
Turner, Dennis


Morris, Estelle (B'ham Yardley)
Vaz, Keith


Morris, Rt Hon John (Aberavon)
Walker, Rt Hon Sir Harold


Mowlam, Marjorie
Wallace, James


Mullin, Chris
Warden, Gareth (Gower)


Murphy, Paul
Wareing, Robert N


Oakes, Rt Hon Gordon
Watson, Mike


O'Brien, Mike (N W'kshire)
Welsh, Andrew


O'Brien, William (Normanton)
Wicks, Malcolm


O'Hara, Edward
Williams, Rt Hon Alan (Sw'n W)


Olner, Bill
Williams, Alan W (Carmarthen)


O'Neill, Martin
Wilson, Brian


Orme, Rt Hon Stanley
Wise, Audrey


Parry, Robert
Worthington, Tony


Patchett, Terry
Wray, Jimmy


Pearson, Ian
Wright, Dr Tony


Pendry, Tom



Pickthall, Colin
Tellers for the Noes:


Pike, Peter L
Ms Barbara Roche and Mr. George Mudie.


Powell, Ray (Ogmore)

Question accordingly agreed to.

MR. DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved,
That this House applauds the improvements in performance in the electricity supply industry since privatisation; welcomes the benefits which customers are receiving in terms of lower prices and improved service; supports the continuing development of competition in the electricity market and the maintenance of effective regulation where this is necessary; and notes that the Director General of Electricity Supply will continue to promote competition and protect the interests of consumers.

STATUTORY INSTRUMENTS, &c

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): With permission, I shall put together the motions relating to statutory instruments.

Hon. Members: Object.

Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments, &amp;c.).

DEFENCE EVALUATION AND RESEARCH AGENCY

That the draft Defence Evaluation and Research Agency Trading Fund Order 1995, which was laid before this House on 27th January, be approved.—[Mr. Burns.]

Question agreed to.

Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments, &amp;c.).

BETTING, GAMING AND LOTTERIES

That the draft Betting, Gaming and Lotteries Act 1963 (Schedule 4) (Amendment) Order 1995, which was laid before this House on 23rd January, be approved.—[Mr. Burns.]

Question agreed to.

Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments, &amp;c.).

LOCAL GOVERNMENT (NORTHERN IRELAND)

That the draft Local Government (Miscellaneous Provisions) (Northern Ireland) Order 1995, which was laid.before this House on 9th February, be approved.—[Mr. Burns.]

Question agreed to.

EUROPEAN COMMUNITY DOCUMENTS

Motion made, and Question put forthwith pursuant to Standing Order No. 102(9) (European Standing Committees).

ISRAEL (AGREEMENT)

That this House takes note of the unnumbered Explanatory Memorandum submitted by the Foreign and Commonwealth Office on 9th December 1994, relating to the conclusion of a Euro-Mediterranean Association Agreement with Israel; and supports the Government's view that this is a welcome development in relations between the European Union and Israel.—[Mr. Burns.]

Question agreed to.

SCOTTISH AFFAIRS

Ordered,
That Mr. George Kynoch be discharged from the Scottish Affairs Committee and Mr. Allan Stewart be added to the Committee.—[Sir Fergus Montgomery, on behalf of the Committee of Selection.]

ENVIRONMENT

Ordered,
That Mr. Roland Boyes be discharged from the Environment Committee and Mr. Bill Olner be added to the Committee.—[Sir Fergus Montgomery, on behalf of the Committee of Selection.]

Business Rates (West Suffolk)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Burns.]

Mr. Richard Spring: I am most grateful to you, Mr. Deputy Speaker, for giving me the opportunity to speak this evening, and I should like to thank my hon. Friend the Minister for being here to reply.
About four weeks ago, many of my constituents who run businesses received an unwelcome notice from the district valuer. Although, of course, there were beneficiaries, overall there were increases in my constituency. In a number of instances, that caused alarm and consternation, with some increases of more than 40, 60 and even 70 per cent.
All non-domestic properties are revalued every five years. The next revaluation comes into effect this year on 1 April. Any judgment of rateable value has been based on the increase or decrease in assessed rental values in the five-year period from 1 April 1988 to 1 April 1993. In 1988, the economy was growing strongly. Obsession with the value of property was a characteristic of that period, as was a belief that the road to riches lay in bricks and mortar. Those were the heady days of boom.
In common with every industrialised country, by 1993 the position was different. Property prices and rentals had weakened, bankruptcies of both a personal and corporate nature had risen, unemployment had increased, and the atmosphere of business confidence had become considerably more negative.
During the boom years, the counties of Suffolk and Cambridgeshire enjoyed the highest levels both of economic growth and of population anywhere in Britain. It is only in the past 12 months that confidence in the business community in west Suffolk has resurfaced, and growth, albeit patchy, in the region is happily once again the highest in the nation.
With that perspective, there was widespread and firm confidence in my constituency that the district valuer would reflect that background in his rental assessments. I fear that, four weeks ago, we were to be disappointed. There are two district councils in my constituency: St. Edmundsbury and Forest Heath. Both fully share my concern at the effect of those revaluations on the business sector.
Let me deal with what I regard as the most glaring aberration—the town of Mildenhall is suffering an average increase of nearly 18 per cent. With the adjacent villages, Mildenhall has 13,500 inhabitants. Unfortunately, it does not have a large supermarket to act as a magnet for shoppers. Forest Heath district council invited the district valuer to visit Mildenhall personally. Its members showed him the obvious number of empty properties. He saw what is perfectly clear to any objective observer: that the economic base for small shopkeepers in the town is, at best, fragile. In view of his visit, the increases proposed were an enormous and unexpected shock.
Among dozens of letters, the secretary of the Mildenhall Retailers Association, Mrs. Barbara Coppeard, has written to me in these terms:
You are aware that many shops have closed over the last few years. Some have tried to re-open with new owners, sadly failing


again within a short time … indeed trading conditions have steadily declined, despite the efforts of hard working small retailers. The town centre is contracting.
If the proposed increases are imposed in April they will inevitably affect the viability of many businesses.
Bluntly, I believe that those increases will have a severe impact on the economy of the town. The district valuer, to whom I have spoken directly about this matter, has said that he will consider it sympathetically if information about vacant shops and rental levels is produced afresh. I trust that he will. As the town's Member of Parliament, I cannot stand idly by while the livelihoods of my constituents are put at risk.
I draw the attention of my hon. Friend the Minister to the situation of Lakenheath, which has a population of 5,500. It has a much smaller number of shops. The average increase of 23 per cent. cannot be justified. The chairman of Lakenheath parish council, Mr. Bruce Rutterford, wrote:
With an almost universal decrease in takings, the proposed increases may well be the final straw and may well lead to closure of some shops. If these shops do close, it is most unlikely that they will ever open again, and it will be a bad day when we start losing more shops in the village. There is much concern and confusion as to just how the district valuer arrives at the figures that are provided, so there appear to be certain inconsistencies here.
The number of United States service personnel attached to RAF Mildenhall and RAF Lakenheath is steadily increasing. The direct and indirect economic contribution made by those bases to the area is enormous. However, there is a changing pattern of purchasing activity by the Americans. As they have expanded in numbers, so have base facilities. They include restaurants, sports facilities and shopping commissaries. The upshot is that the overwhelming bulk of consumer items are purchased on favourable terms on the bases, and paid for in dollars.
The overall impact is spelt out in a letter from E. Carter and Sons Ltd. of Mildenhall, a home furnishing, removal and storage business in the high street. Mr. Carter wrote:
The proposed revaluation of my property shows an increase of 44.87 per cent. I consider this to be excessive as my shop has not had a material change since the last valuation, and indeed trading conditions in Mildenhall have declined. With my business suffering a 3.13 per cent. decrease in turnover and a net loss over the last three years, the true rentable value has in fact decreased as traders leave town. This increase places an unfair burden on my profitability and will affect my long-term viability.
My own inquiries and observations endorse Mr. Carter's comments. There is no objective basis for any general upward revaluation of properties in Mildenhall and in Lakenheath in particular, and I share my constituents' concern at the proposed increases, which will considerably damage the commercial life of those towns.
The largest town in my constituency is Bury St. Edmunds, where there is also considerable concern about a number of projected revaluations. The same sentiments have been expressed by shopkeepers in Newmarket and in a letter from Mr. Eddie Stewart, the chairman of Brandon chamber of trade, where the average increase is 13.5 per cent.
I appreciate that the overall increase in west Suffolk is modest compared with other parts of England, but I want to highlight the collection of data to assess rateable value. That process results in erratic assessments, some of which

bear no reality to true rental values. With the best will in the world, the district valuer does not appear to have full information on base rental values.
In 1993, it was common for all sorts of incentives to be offered in conjunction with lettings. It may be that the district valuer was not aware of rent-free periods and even reverse premiums. Much of the district valuer's evidence comes from rent returns by individual occupiers. Local chartered surveyors informed me that some forms were inaccurately completed.
One solution would be to sub-contract the preparation of the valuation list to local estate agents, surveyors and valuers on a 100 per cent. basis or—as with the council tax—the district valuer could undertake some valuation work, supported by local surveyors and valuers. That would have a dramatic effect on reducing excessive anomalies.
I shall now examine the appeals procedure. It is true that this is free, but many small business men seek professional advice. I need only add that there is a huge number of fly-by-night so-called professional advisers. The appeals procedure is unquestionably stressful. Given that, I applaud the help and guidance being given by Forest Heath district council to potential appellants in its area.
What is particularly troublesome, however, is that the process can take a long time. In respect of the 1990 list, it took at least a year for appeals to be dealt with, and in many cases there were periods of two, three, four and even five years before appeals were considered. Such cases exist in my constituency. In practice, the district valuer is not predisposed to respond until the appeals are listed for hearing by the local valuation court.
Business ratepayers have to pay the new rates on their assessment when entered into the list, even if it is clearly incorrect, and they get a refund of overpaid rates only following negotiations with the district valuer's office. It is my understanding that the district valuer's office is paid per appeal. However, if the anomalies are substantially reduced in the first place, the considerable number of appeals will diminish too. If we can cut down on the unreasonable anomalies, we can time-limit appeals.
If patients are guaranteed national health service treatment within specific times, the principle should extend to business rate appeals. I suggest a maximum of one year. All council tax banding appeals were effectively dealt with in under one year. It can and should he done.
I fully support the principle behind the Local Government Finance Act 1988, with the uniform national non-domestic rate and the formula of rateable value multiplied by a standard rate poundage. I make it clear that I recognise the substantial help of the £500 million of transitional relief. The increase on properties with a rateable value of £10,000 will be confined to 12.4 per cent., and below £10,000, the figure is 9.9 per cent. Of course, the limits will increase until full rates liabilities are met.
In a discussion document produced by the Association of Metropolitan Authorities, the Association of County Councils and the Association of District Councils, it was argued that business rates should be returned to local authority control. When I stood as a


parliamentary candidate at Ashton-under-Lyne, I saw for myself the appalling consequences of this. Business rates were far too high, with the result that fledgling businesses could not prosper and would often have to move out of the area to survive at all.
That was the value that a Labour-controlled authority placed on the enterprises that created jobs in the area. What I saw was a disgrace, yet it was not as bad as the ruinous anti-business policies pursued by many other Labour-controlled authorities. I for one never wish to see whole areas of our country blighted again by such destructive policies.
Is there no way in which well-managed local councils can benefit from their own sensible policies? I have two excellent Conservative-controlled district councils in my constituency. Neither St. Edmundsbury borough council nor Forest Heath district council is proposing any increase in council tax this year. Additionally, the former is debt-free. Is there not some way in which such local authorities can be rewarded, especially if they create an environment for business expansion and job creation? Is not some form of rates repatriation possible?
I very much applaud the viewpoint of my right hon. Friend the Secretary of State for the Environment who, being from Suffolk, is right in his desire to strengthen town centres as lively, prosperous and agreeable places in which to live and shop. At a minimum, therefore, could some part of the moneys collected in well-managed local authorities be ploughed back into town centre improvements? Better lighting and pedestrian precincts encourage people to live and shop in town centres. I believe that all the towns in my constituency—Bury St. Edmunds, Newmarket, Mildenhall, Brandon and Lakenheath—would benefit from that. Their attractiveness would be further enhanced. I believe that that course would be right and fair.
The small business sector is the engine of west Suffolk's local economy and of job creation. It is the very lifeblood of my constituency. The Government have brought forward a number of welcome measures to help the small and medium business sector. I mention in particular the substantial number of businesses which have been taken out of VAT altogether, the cut in corporation tax for small businesses, and the higher profit limits for the smaller companies' rate of 25 per cent. The abolition of inheritance tax and the abolition of capital transfer tax on lifetime gifts are to be greatly welcomed. I hope that the abolition of the statutory audit will be the first of a number of further deregulatory policy initiatives.
However, while the principle of a national non-domestic rate is correct, in practice it produces too many specific anomalies, which cause stress and anxiety to smaller businesses which are finally beginning to put the recession behind them. The Government have made a number of important and useful concessions on business rates, but more needs to be done. I hope that my hon. Friend will reflect positively on the ideas that I have put forward, which would be greatly welcomed in west Suffolk and, indeed, throughout the country as a whole.

The Parliamentary Under-Secretary of State for the Environment (Mr. Robert B. Jones): My hon. Friend the Member for Bury St. Edmunds (Mr. Spring) has put the concerns of his constituents most eloquently, not only tonight but in a substantial number of representations that he has made to me and to other Ministers in recent weeks.
Let me first say that the Government think it essential that rateable values keep pace with the property market to ensure that rates fall with relative fairness on businesses everywhere. That is why we have regular revaluations and, indeed, have tied ourselves to undertake them every five years through statute. Parliament has approved that.
Rates, of course, are based on rents. Data collected by the Valuation Office Agency—I shall turn to how that is done shortly—shows that in my hon. Friend's constituency, rents rose between 1988 and 1993, the dates on which the two recent valuations are based. That has resulted in a rise in rateable values of 11 per cent. in Forest Heath, and of 13 per cent. in St. Edmunsbury. With the transitional arrangements that we have introduced to cushion the effects of the revaluation, my latest information suggests that bills will rise in those areas by, on average, 5 per cent. And 4 per cent. respectively.
The effect of the transitional arrangements will be to limit rate rises for small businesses to no more than 7.5 per cent., after allowing for inflation. For property with a new rateable value of £10,000 or more—or £15,000 or more in London—increases will be limited to a maximum of 10 per cent. after allowing for inflation. For small properties consisting of business and living accommodation, the corresponding limit will be 5 per cent. Those limits will continue to apply throughout the period up to the next revaluation in 2000.
More than 3,000 properties in my hon. Friend's constituency, and 1.25 million in England as a whole, will benefit from the scheme. In East Anglia, that is worth almost £50 million to ratepayers. Part of the cost will be met by the Exchequer and part by limiting rate reductions. Of course, the revaluation will not affect the overall yield from business rates. Statute requires us to adjust the poundage to account for any changes in the total rateable value for England.
As it happens, the 1995 revaluation will hardly change the total of rateable values. That is why, as my hon. Friend noted, we have only increased the poundage in line with inflation, from 42.3p in the pound to 43.2p. After allowing for the effects of future appeals and inflation, that ensures that the rates burden overall is unchanged.
Moving on to how data are collected, broadly speaking, valuation officers are required to assess the market rent for properties using values from April 1993. The best evidence of a market rent is the actual rent on the property itself. That is why valuation officers ask all occupiers for details of the rents they are paying. They have been collecting that information since April 1993. That evidence is used to assess the open market rent, and then the rateable value of the property.
It is quite possible that, when agreeing actual rents, occupiers will receive incentives such as a lump sum payment or a period when no rent is payable. That would, of course, alter the level of rent agreed. That is why valuation officers ask for full details on those incentives and adjust the rents accordingly. Indeed, some of the information may also be incorrect. However, the valuation officer will be able to examine the rental evidence on many similar properties, and will ignore those which appear out of line.
However, I am pleased to hear that ratepayers in my hon. Friend's constituency have started to talk to the valuation officer. For the first time with this revaluation, the Valuation Office Agency has let ratepayers know their rateable values in advance of their rate bills. That notification, together with a booklet from my Department explaining the new arrangements, went to ratepayers so that they would have early notice of changes. If they think the valuation officer has not taken all the facts into account, they can provide him with more information and open a dialogue with him—the aim being to resolve matters more quickly.
I was interested to hear my hon. Friend's suggestion that there may be scope for contracting out to private firms some of the work on future revaluations. Ideas of that kind are timely, because the VOA is currently undergoing its first framework review as an agency.
My hon. Friend referred to the use of private firms in the banding of dwellings for council tax. That was indeed a success, and a practical illustration of how the private sector can contribute to valuation work. We are examining other possibilities in the framework review. However, we need to recognise that the parallel between council tax handing and valuation for rating is not an exact one.
The banding of domestic property, whatever its organisational challenges, was less difficult technically than the revaluation of non-domestic property. Information about the sale prices of houses and flats is relatively plentiful, accessible and easy to interpret. Because the task was to allocate properties to one of seven broad bands rather than to determine precise values, much of the work could be carried out at the desk, and internal inspections were not required.
Valuation for rating is different in all these respects. It requires a more specialised expertise, which normally takes a number of years of training and experience to develop. The rating profession is a small and fragmented one. Finally, detailed inspection of properties is often needed, and VOA officers have powers of entry. It would be, at least, quite a departure to give such powers to a private contractor.
I certainly do not want to suggest that there is no potential role for the private sector in future revaluations. There are, however, a number of difficulties to consider, which did not apply in the case of the council tax.
My hon. Friend suggested that there might be scope for restoring to local government, or at least to some authorities, a measure of control over the non-domestic rate. I am sure that my hon. Friend agrees that the logic of our 1990 reforms was extremely powerful, and remains so even now that memories of the worst

excesses of local government under the earlier arrangements have started to fade. It continues, besides, to enjoy the support of the main business organisations. I take it, therefore, that he has in mind only some marginal adjustment to the new regime, rather than wholesale change.
I can well understand that authorities which had always made moderate and responsible use of their rating powers in the past may have felt frustrated by the 1990 changes. I do, however, see some difficulties with the idea of rewarding good past behaviour with some relaxation of the current regime.
First, there could be no question of simply rewarding those authorities of which my hon. Friend and I happened in our wisdom to approve, even though I join my hon. Friend in paying tribute to St Edmundsbury and Forest Heath councils: objective statistical criteria would be needed, and I doubt whether those would prove technically straightforward or uncontroversial, or could be guaranteed not to throw up perverse results.
We would need, too, to ponder rather carefully the nature of the reward. Would it, for example, consist of a power to raise a supplementary levy on the non-domestic rate to finance additional expenditure? That would seem on the face of it a rather illogical way of recognising previous restraint in budgeting. Offsetting measures would be required, too, to ensure that the selected authorities' use of their power did not add to the total of public expenditure. Clearly, the issue requires a great deal of thought, but I appreciate the spirit in which my hon. Friend has put his proposal forward, and new ideas in the area are always welcome.
My hon. Friend suggested that the appeals procedures are far from satisfactory. We would agree, which is why we have undertaken extensive consultation on the issue, and are to make changes to the system. The new procedures will allow ratepayers who disagree with their new value to appeal at any time up to 1 April 2001. In 1990, ratepayers had only six months to lodge an appeal.
After 1 April this year, if the valuation officer does not agree with the ratepayer's proposal for a new value, he must pass it to the local valuation tribunal as an appeal within three months of receiving it, not six months as is the case at present.
However, when he talks about his constituents with appeals still outstanding from 1990, my hon. Friend should bear in mind the fact that appeals can still be made against the 1990 list. If there is a change in the property, or a change in the locality, ratepayers can appeal up to six months after that change. Of the 1.25 million appeals received so far in England, nearly half have been made in the years since 1990. So it is not surprising that some cases have still to be heard.
By the end of December last year, my hon. Friend's constituents had made just over 3,000 appeals against the 1990 list. Over half of those were made after the initial appeal period. I understand that there are some 600 outstanding. Eighty per cent. have been settled— slightly better than the national average of 76 per cent. We expect that the vast majority of proposals received by the end of March 1995 will he cleared by the end of 1995–96.
We hope that our new procedures will speed the process for the next quinquennium. We also hope that the removal of time limits for initial appeals will make


it less easy for fly-by-night operators to press the unsuspecting ratepayer into parting with money to make an appeal which never happens. I am very aware of the instances of fraudulent activities, and I am greatly concerned about them. My Department's information leaflets contain warnings to ratepayers to be on their guard against those companies. The professional bodies have also issued warnings, which have been picked up by the national press as well as the trade press.
I believe that businesses are considerably better off under the new system of uniform business rates. They can now be assured that local authorities cannot increase bills from year to year to finance extra expenditure. That compares with the 1980s, when poundages rose

by 37.4 per cent. more than inflation. Since 1990, increases in the poundage have been restricted to the rate of inflation. In the past four Budgets, the Chancellor has committed a considerable amount of relief to ratepayers. That has ensured that, in real terms, ratepayers now pay less in rates than they did in 1989–90.
I am grateful to my hon. Friend for this opportunity to air such important issues, and I hope that I have assured him that we are looking at other ways of doing things and, in the case of appeals, are taking immediate steps to change things.

Question put and agreed to.

Adjourned accordingly at four minutes to Eleven o'clock.